Economics at your fingertips  

Fiscal Responsiveness to Public Debt: An Analysis of Regional Debt Limit Uncertainty in Spain

Joan Maria Mussons Olivella ()
Additional contact information
Joan Maria Mussons Olivella: Generalitat de Catalunya and Universitat de Barcelona

Hacienda Pública Española / Review of Public Economics, 2020, vol. 233, issue 2, 55-83

Abstract: The present analysis addresses the primary balance response to the debt of Spanish Autonomous Com¬munities (ACs) from 1987 to 2015. Overall, the results provide evidence of a nonlinear relationship between these variables, which points to a situation of fiscal fatigue and reduced fiscal space. In 2015 the regional debt ratio stood at 26.8% of Gross Value Added, slightly above our lower estimate for the debt limit (24%) and well below the upper estimate (37%). We obtain lower debt limit thresholds when controlling for the extraordinary liquidity support measures provided by the central government. A reduced fiscal space in ACs calls for measures to ensure a sustainable debt trajectory and regain some room to deal with potential negative shocks.

Keywords: Public debt; debt sustainability; debt limit; uncertainty; fiscal reaction function (search for similar items in EconPapers)
JEL-codes: E62 H62 H63 H74 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) ... 9b420fd0dc&preview=1 (application/pdf)

Related works:
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:

Access Statistics for this article

More articles in Hacienda Pública Española / Review of Public Economics from IEF Contact information at EDIRC.
Bibliographic data for series maintained by Miguel Gómez de Antonio ().

Page updated 2020-09-12
Handle: RePEc:hpe:journl:y:2020:v:233:i:2:p:55-83