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Debt Sustainability Issues in Central and East European Countries

Author

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  • Bettina Bökemeier
  • Andreea Stoian

Abstract

The goal of this study is to investigate debt sustainability in ten Central and East European countries over the period 1998–2015. We calculate the stabilized debt ratios, turning points, and debt limits using estimates of a fiscal reaction function in its cubic form. We use a balanced panel with fixed effects. We find that in 2017, the public debt exceeded the stabilized debt ratio in all the countries examined. However, the public debt is stable and is below the turning point. Moreover, governments are still far from the debt thresholds of “fiscal fatigue.”

Suggested Citation

  • Bettina Bökemeier & Andreea Stoian, 2018. "Debt Sustainability Issues in Central and East European Countries," Eastern European Economics, Taylor & Francis Journals, vol. 56(5), pages 438-470, September.
    • Handle: RePEc:mes:eaeuec:v:56:y:2018:i:5:p:438-470
    DOI: 10.1080/00128775.2018.1496456
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    Cited by:

    1. Hsing Yu, 2017. "Is Real Depreciation or More Government Deficit Expansionary? The Case of Slovenia," South East European Journal of Economics and Business, Sciendo, vol. 12(1), pages 50-56, April.
    2. Pal, Shreya & Mahalik, Mantu Kumar & Zhao, Qiuyun & Liu, Fan & Soliman, Alaa M., 2024. "Boosting productive capacity in OECD countries: Unveiling the roles of geopolitical risk and globalization," Technological Forecasting and Social Change, Elsevier, vol. 202(C).
    3. Wysocki, Maciej & Wojcik, Cezary & Freytag, Andreas, 2024. "Populists and fiscal policy: The case of Poland," European Journal of Political Economy, Elsevier, vol. 83(C).
    4. Olaoye, Olumide O. & Eluwole, Oluwatosin O. & Ayesha, Aziz & Afolabi, Olugbenga O., 2020. "Government spending and economic growth in ECOWAS: An asymmetric analysis," The Journal of Economic Asymmetries, Elsevier, vol. 22(C).
    5. Olumide Olusegun Olaoye & Phillip A. Olomola, 2023. "Sub‐Saharan Africa's rising public debt stock: Is there a cause for concern?," South African Journal of Economics, Economic Society of South Africa, vol. 91(1), pages 85-115, March.
    6. Olegs Tkacevs & Karsten Staehr & Katri Urke, 2023. "Fiscal Performance under Inflation and Inflation Surprises: Evidence from Fiscal Reaction Functions for the Euro Area," Working Papers 2023/04, Latvijas Banka.
    7. Wysocki Maciej & Wójcik Cezary, 2018. "Sustainability of fiscal policy in Poland in the period 2004–2017," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 54(3), pages 219-226, September.
    8. Taner Turan & Pelin Varol Iyidogan, 2022. "Estimating Fiscal Reaction Functions for Developing and Developed Countries: A Dynamic Panel Threshold Analysis," Journal of Economics / Ekonomicky casopis, Institute of Economic Research, Slovak Academy of Sciences, vol. 70(5), pages 393-410, May.
    9. Olumide O. Olaoye & O. J. Omokanmi & Mosab I. Tabash & S. O. Olofinlade & M. O. Ojelade, 2024. "Soaring inflation in sub-Saharan Africa: A fiscal root?," Quality & Quantity: International Journal of Methodology, Springer, vol. 58(1), pages 987-1009, February.
    10. Mackiewicz-Łyziak, Joanna & Łyziak, Tomasz, 2019. "A new test for fiscal sustainability with endogenous sovereign bond yields: Evidence for EU economies," Economic Modelling, Elsevier, vol. 82(C), pages 136-151.
    11. Olumide Olusegun Olaoye & Mosab I. Tabash & Olatunde Julius Omokanmi & Rotimi Ayoade Ogunjumo & Matthew Oyeleke Ojelade & James A. Ishola, 2022. "Macroeconomic implications of escalating stock of public debt: Evidence from sub‐Saharan African economies," African Development Review, African Development Bank, vol. 34(4), pages 527-540, December.
    12. Owusu Benjamin, 2021. "Fiscal Sustainability Hypothesis Test in Central and Eastern Europe: A Panel Data Perspective," Central European Economic Journal, Sciendo, vol. 8(55), pages 285-312, January.
    13. Tomasz Łyziak & Joanna Mackiewicz-Łyziak, 2019. "Sustainability of Public Finances in European Economies: Fiscal Policy Reactions and Market Pricing," Eastern European Economics, Taylor & Francis Journals, vol. 57(1), pages 3-19, January.
    14. Attahir Babaji Abubakar, 2020. "Does fiscal tightening (loosening) reduce public debt?," African Development Review, African Development Bank, vol. 32(4), pages 528-539, December.
    15. Yu HSING, 2019. "Does the Mundell-Fleming Model apply to Poland?," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(4(621), W), pages 265-272, Winter.
    16. Maciej Wysocki & Cezary Wójcik, 2018. "Fiscal Sustainability in the EU After the Global Crisis: Is there any Progress?," CESifo Working Paper Series 7230, CESifo.

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