PUBLIC DEBT SUSTAINABILITY IN SERBIA BEFORE AND DURING THE GLOBAL FINANCIAL CRISIS

Vladimir Andric, Milojko Arsić and Aleksandra Nojković

Economic Annals, 2016, vol. 61, issue 210, 47 - 78

Abstract: We have analyzed the behaviour of primary fiscal balance and public debt in Serbia before and in the aftermath of the global financial crisis. The results of our analysis are: i) public debt to GDP ratioexhibits (near) unit root behaviour with an overall upward time trend; ii) the response of primary fiscal balance to public debt has been insufficient to mean revert the upward trend in government debt; iii) the efforts of the Serbian government to repay the debt principal after the fiscal rule breach have not been persistent, providing empirical support to the fiscal fatigue hypothesis; iv) the government budget constraint has deteriorated since the beginning of the global financial crisis; v) the response of primary fiscal balance to public debt from the onset of the global financial crisis has dropped more severely in comparison to other European economies.

Keywords: Serbia; unit root tests; fiscal reaction functions; global financial crisis (search for similar items in EconPapers)
JEL-codes: C54 H63 P20 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (4)

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