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Government debt, European Institutions and fiscal rules: a synthetic control approach

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  • Robert Kraemer

    (European Stability Mechanism)

  • Jonne Lehtimäki

    (University of Turku)

Abstract

Public debt and its development are key questions of public sector economics and fiscal policy. This paper uses the Synthetic Control Method to study how different large-scale steps of European integration and the establishment of the EU fiscal framework have affected government debt in EU Member States. The results point to a notable debt-restricting effect of EU membership and the introduction of the Stability and Growth Pact for a large majority of the studied country groupings as well as for individual countries. Outside of a few individual countries, the actual government debt levels are substantially lower than in the synthetic alternatives.

Suggested Citation

  • Robert Kraemer & Jonne Lehtimäki, 2024. "Government debt, European Institutions and fiscal rules: a synthetic control approach," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 31(4), pages 1112-1157, August.
    • Handle: RePEc:kap:itaxpf:v:31:y:2024:i:4:d:10.1007_s10797-023-09791-z
    DOI: 10.1007/s10797-023-09791-z
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    More about this item

    Keywords

    European union; Stability and growth pact; European fiscal framework; Fiscal rules; Government debt; International fiscal issues;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H6 - Public Economics - - National Budget, Deficit, and Debt
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods

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