KEYNESIAN AND NEOCLASSICAL FISCAL SUSTAINABILITY INDICATORS, WITH APPLICATIONS TO EMU MEMBER COUNTRIES

Public Economics from University Library of Munich, Germany

Abstract: The purposes of this paper are twofold: first, it aims at critically evaluating the solvency criterion, pioneered by Hamilton and Flavin (1986), which is nowadays almost hegemonic in the analysis of public debt sustainability, and at illustrating alternative measures of sustainability grounded on the dynamic stability approach originated by Domar (1944); secondly, it looks at sustainability in EMU member countries, with particular attention given to the relations between sustainability and the design of fiscal rules. The results show that the 3% rule imposed by the Maastricht treaty can be justified as a sustainability requirement for an 'average' EMU member country. At the same time, the dispersion around this average is quite substantial: this questions the viability of uniform deficit caps across EMU member countries.

Keywords: public debt sustainability; dynamic analysis; solvency constraint; EMU; fiscal rules (search for similar items in EconPapers)
JEL-codes: E62 H63 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2004-11-14
New Economics Papers: this item is included in nep-ifn, nep-mac and nep-pke
Note: Type of Document - pdf; pages: 27
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
https://econwpa.ub.uni-muenchen.de/econ-wp/pe/papers/0411/0411005.pdf (application/pdf)

Related works:
Working Paper: Keynesian and neoclassical fiscal susteinability indicators, with applications to EMU member countries (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwppe:0411005

Access Statistics for this paper

More papers in Public Economics from University Library of Munich, Germany
Bibliographic data for series maintained by EconWPA ().