Interest payment on government debt and public spending in Italy: An empirical analysis

Roberto Cellini and Luca C Prezzavento

MPRA Paper from University Library of Munich, Germany

Abstract: This article investigates how the public expenditure structure, and the expenditures in specific fields of the public sector, are affected by the dynamics of interest payment on public debt, in the case of Italy. Italy has the third largest public debt in the world, and interest payments are of considerable size; though not steadily, however, their dynamics has been decreasing over the last two decades. This could have represented an opportunity for restructuring public expenditure. However, our results show that there is no effect of the dynamics of interest payments upon the dynamics of primary public expenditure. The result is based on the analysis of both Granger-causality links and simultaneous relations between interest payments and primary public expenditure. Public expenditure is considered in aggregate terms in current and capital account, and as articulated in a number of specific areas.

Keywords: Public debt; Public expenditure; Interest payment; Debt cost; Italy. (search for similar items in EconPapers)
JEL-codes: H50 H61 (search for similar items in EconPapers)
Date: 2016-12-08, Revised 2017-03-31
New Economics Papers: this item is included in nep-pbe
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Related works:
Working Paper: Interest payment on government debt and public spending in Italy: An empirical analysis (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:78066

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