The challenge of controlling public debt and restoring budget equilibrium

Le défi de la maitrise de la dette publique et du retour à l'équilibre

Jean-Marie Monnier ()
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Jean-Marie Monnier: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: The objective of the Communication is to highlight the developments affecting the main factors explaining changes in government debt and deficit between 1998 and 2017. Based on a simplified representation in term of the "snowball effect", three forces belonging to public policy and influencing the dynamics of public debt are studied: the interest rates on public loans, the GDP growth rate and the budget balance (the difference between public expenditures and revenues). This shows that debt dynamics are essentially long-term in nature, even if breaks occurred during the 2008-2012 shock. The importance of economic growth in this dynamic is emphasized. Moreover, two factors of risk for public finances are stressed: the risk linked to a possible reversal of the interest rate trend and the growing inability of tax revenues to cover public expenditures.

Date: 2018-04-05
Note: View the original document on HAL open archive server: https://hal.science/hal-01906551
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Published in Colloque inaugural du réseau Allix: "Les premières lois financières de la présidence Macron", Apr 2018, Paris, France. pp.277-283

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Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:hal-01906551

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