Back to Maastricht: Public Debt Sustainability and the Fiscal Multipliers

Matteo Deleidi, Nadia Garbellini and Gianmarco Oro

International Journal of Political Economy, 2024, vol. 53, issue 3, 262-271

Abstract: This essay contributes to the debate on the relevance of fiscal multipliers in the design of economic policies. The need for a different methodological perspective emerges from the results produced in the Eurozone by various fiscal consolidation programs, which, after being implemented following the sovereign debt crisis of 2011 and then suspended to address the COVID-19 crisis, are now being reintroduced according to the balanced budget rules set forth by the Maastricht Treaty. Building on the method elaborated by Pasinetti, we identify the sustainability area of the debt-to-GDP ratio within which different levels of public deficit can be achieved based on the fiscal multiplier. The analysis reveals that, under certain country-specific conditions, imposing limits on public spending can be counterproductive to the sustainability of public debt.

Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/08911916.2024.2391198 (text/html)
Access to full text is restricted to subscribers.

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: https://EconPapers.repec.org/RePEc:mes:ijpoec:v:53:y:2024:i:3:p:262-271

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MIJP20

DOI: 10.1080/08911916.2024.2391198

Access Statistics for this article

More articles in International Journal of Political Economy from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().