On the Objective of Sound Public Finance in Eurozone

Mariangela Bonasia () and Rosaria Rita Canale
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Mariangela Bonasia: Department of Business and Economic Studies, University of Naples ‘‘Parthenope’

Rivista Internazionale di Scienze Sociali, 2015, vol. 123, issue 2, 161-178

Abstract: The aim of the paper is to estimate, through the dynamic panel data analysis, the effects of change in structural balance on debt and public balance in 11 Eurozone countries in the years 2000- 2013, then divided into two time span: 2000-2008 and 2009-2013. The results show, for the whole sample considered, that – contrary to the accounting rules – the higher is the structural balance the higher is the debt especially after 2009. In regard to the effect on overall and primary public balance, the accounting relationship is confirmed for the whole period, while less than proportional for the two sub-samples. These empirical results suggest, therefore, that if a sound public finance has to be considered as an objective to be achieved per se, it should not be pursued in times of declining macroeconomic conditions.

Keywords: Structural balance; Sound public finance; Dynamic panel ordinary last squares (search for similar items in EconPapers)
JEL-codes: C23 E60 E62 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:vep:journl:y:2015:v:123:i:2:p:161-178

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