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Determining factors and future scenarios for the Spanish public debt

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  • Manuel Díaz
  • Carmen Marín
  • Diego Martínez

Abstract

The Spanish public debt to GDP ratio has reached its highest level in 2020. In this paper, we study the evolution of the factors explaining the recent changes in this debt ratio from 2015 to 2021. Moreover, we estimate the fiscal consolidation efforts needed to achieve a determined level of public debt to GDP ratio. Likewise, a macroeconomic model is calibrated to simulate the future evolution of debt under different consolidation strategies. The simulations are obtained at country and regional levels. Our main conclusion indicates that it will be necessary a significant fiscal consolidation effort to address the deleveraging process that is expected to be required by the reform of the European fiscal rules.

Suggested Citation

  • Manuel Díaz & Carmen Marín & Diego Martínez, 2023. "Determining factors and future scenarios for the Spanish public debt," Studies on the Spanish Economy eee2023-17, FEDEA.
    • Handle: RePEc:fda:fdaeee:eee2023-17
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    References listed on IDEAS

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    1. Gilles Mourre & Aurélien Poissonnier, 2019. "What Drives the Responsiveness of the Budget Balance to the Business Cycle in EU Countries?," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 54(4), pages 237-249, July.
    2. Thomas Laubach, 2009. "New Evidence on the Interest Rate Effects of Budget Deficits and Debt," Journal of the European Economic Association, MIT Press, vol. 7(4), pages 858-885, June.
    3. Warmedinger, Thomas & Checherita-Westphal, Cristina & Drudi, Francesco & Setzer, Ralph & De Stefani, Roberta & Bouabdallah, Othman & Westphal, Andreas, 2017. "Debt sustainability analysis for euro area sovereigns: a methodological framework," Occasional Paper Series 185, European Central Bank.
    4. Jocelyn Boussard & Francisco de Castro & Matteo Salto, 2012. "Fiscal Multipliers and Public Debt Dynamics in Consolidations," European Economy - Economic Papers 2008 - 2015 460, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    5. Mr. Manmohan S. Kumar & Mr. Emanuele Baldacci, 2010. "Fiscal Deficits, Public Debt, and Sovereign Bond Yields," IMF Working Papers 2010/184, International Monetary Fund.
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    Cited by:

    1. Carmen Marín-González & Diego Martínez-López, 2024. "Fiscal stabilisation, debt sustainability and public spending in subnational governments. The case of the Spanish regions," Studies on the Spanish Economy eee2024-02, FEDEA.

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