IDEAS home Printed from https://ideas.repec.org/p/aee/wpaper/1603.html
   My bibliography  Save this paper

Fiscal fatigue and debt sustainability: Empirical evidence from the Eurozone 1980-2013

Author

Listed:
  • Victor Echevarria Icaza

    (Universidad Complutense de Madrid Departamento de Fundamentos del Análisis Económico II (Economía Cuantitativa))

Abstract

Fiscal fatigue may lead a country to stop adjusting when debt continues rising in spite of a prolonged fiscal adjustment. Once fiscal fatigue sets in, the country may stop adjusting, thus compromising debt sustainability. However, the absence of sufficient adjustment may be the consequence of governments implementing delayed adjustment as a result of the domestic policy-making process. This paper investigates the factors that will lead to delayed adjustment instead of fiscal fatigue in the face of rising debt. Strong institutions and underlying macroeconomic conditions can be useful in averting the fiscal fatigue, and lead to an improvement in the fiscal balance once the debt limit has been reached. Acknowledgements: The author is grateful to Simón Sosvilla for his comments and support. The author also thanks Javier Perez and Seminar participants at Universidad Complutense de Madrid.

Suggested Citation

  • Victor Echevarria Icaza, 2016. "Fiscal fatigue and debt sustainability: Empirical evidence from the Eurozone 1980-2013," Working Papers 16-03, Asociación Española de Economía y Finanzas Internacionales.
    • Handle: RePEc:aee:wpaper:1603
    as

    Download full text from publisher

    File URL: http://www.aeefi.com/RePEc/pdf/defi16-03.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Margaretic, Paula & Pouget, Sébastien, 2018. "Sovereign bond spreads and extra-financial performance: An empirical analysis of emerging markets," International Review of Economics & Finance, Elsevier, vol. 58(C), pages 340-355.
    2. Gunther Capelle-Blancard & Patricia Crifo & Marc-Arthur Diaye & Rim Oueghlissi & Bert Scholtens, 2016. "Environmental, Social and Governance (ESG) performance and sovereign bond spreads: an empirical analysis of OECD countries," Working Papers hal-01401718, HAL.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aee:wpaper:1603. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Luis Miguel del Corral Cuervo (email available below). General contact details of provider: https://edirc.repec.org/data/aeefiea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.