Budgetary stabilisation and the level of public debt

Niko Gobbin
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Niko Gobbin: Ghent University

Chapter 4 in Economic Spillovers, Structural Reforms and Policy Coordination in the Euro Area, 2008, pp 107-127 from Springer

Abstract: Abstract In this chapter we look into the interaction between the level of government debt and the effects of fiscal policy on private consumption in a number of EU-15 countries. Hence, the chapter somewhat deviates from other chapters in the book: We do not focus on economic spillovers between countries, but remain within the country borders. The questions we address are nonetheless valuable ones to evaluate policy coordination. If the transmission of fiscal policy actions depends on the debt level, a common EU-wide fiscal action will differently affect the individual Member States. Or put differently, to achieve a common goal different actions are needed. In addition, a common fiscal target, such as the Maastricht deficit criterion, might be harder to achieve in a country with a higher or lower initial government debt level. On the other hand, dependence of fiscal transmission on the debt level might also be seen as an additional rationale for the debt convergence criterion.

Keywords: Fiscal Policy; Disposable Income; Real Interest Rate; Public Debt; Private Consumption (search for similar items in EconPapers)
Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:spr:conchp:978-3-7908-1970-0_4

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DOI: 10.1007/978-3-7908-1970-0_4

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