EconPapers    
Economics at your fingertips  
 

Fiscal space in the euro area before Covid-19

Jerome Creel

No 2020-17, Documents de Travail de l'OFCE from Observatoire Francais des Conjonctures Economiques (OFCE)

Abstract: Numerical simulations of fiscal space in the euro area, based on 12 different situations, point to the large uncertainty surrounding the capacity of Member States to pay back their public debts. Debt sustainability appears to depend crucially on long-term nominal interest rate being lower than nominal growth for a long period. Only in this case do major European countries experience some additional fiscal space. Although the analytics behind this exercise is common knowledge among macroeconomists, it gives an order of the magnitude of fiscal space in the euro area and it confirms that interactions between the ECB and governments are key to escape the public finances consequences of an exogenous global shock like Covid-19.

Keywords: Fiscal policy; public debt; fiscal deficit; Covid-19. (search for similar items in EconPapers)
JEL-codes: E62 H62 H63 (search for similar items in EconPapers)
Date: 2020-05
New Economics Papers: this item is included in nep-mac
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.ofce.sciences-po.fr/pdf/dtravail/OFCEWP2020-17.pdf (application/pdf)

Related works:
Journal Article: Fiscal space in the euro area before Covid-19 (2020) Downloads
Working Paper: Fiscal space in the euro area before Covid-19 (2020) Downloads
Working Paper: Fiscal space in the euro area before Covid-19 (2020) Downloads
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:fce:doctra:2017

Access Statistics for this paper

More papers in Documents de Travail de l'OFCE from Observatoire Francais des Conjonctures Economiques (OFCE) Contact information at EDIRC.
Bibliographic data for series maintained by Francesco Saraceno (francesco.saraceno@sciencespo.fr).

 
Page updated 2025-02-17
Handle: RePEc:fce:doctra:2017