Fiscal consolidations and public debt in Europe

Gianluca Cafiso and Roberto Cellini

International Tax and Public Finance, 2014, vol. 21, issue 4, 614-644

Abstract: The objective of this paper is to gain insights into the relationship between deficit-reducing policies and the evolution of the debt/GDP ratio. We consider past events of fiscal consolidation in a selected group of EU countries and check what is the associated change of the debt/GDP ratio both from a short- and medium-term perspective. In the analysis, we also differentiate between tax-based and savings-based fiscal consolidations and the pre-Euro and Euro periods. Our results point towards a positive short-term effect, while the medium-term effect turns out to be negative. Savings-based fiscal consolidations result to be less negative on the DGR evolution than tax-based ones. The Euro’s introduction seems not to have altered significantly the relationship studied. Copyright Springer Science+Business Media New York 2014

Keywords: Fiscal consolidations; Debt/GDP ratio; Europe; H63; E63 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (14)

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Working Paper: Fiscal Consolidations and Public Debt in Europe (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:kap:itaxpf:v:21:y:2014:i:4:p:614-644

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DOI: 10.1007/s10797-014-9319-y

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