Fiscal Sustainability in the Presence of Systemic Banks: the Case of EU Countries

Agnès Benassy-Quere and Guillaume Roussellet

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

Abstract: We provide a first attempt to include off-balance sheet, implicit insurance to SIFIs into a consistent assessment of fiscal sustainability, for 27 countries of the European Union. We first calculate tax gaps à la Blanchard (1990) and Blanchard et al. (1990). We then introduce two alternative measures of implicit off-balance sheet liabilities related to the risk of a systemic bank crisis. The first one relies of microeconomic data at the bank level. The second one relies on econometric estimations of the probability and the cost of a systemic banking crisis, based on historical data. The former approach provides an upper evaluation of the fiscal cost of systemic banking crises, whereas the latter one provides a lower one. Hence, we believe that the combined use of these two methodologies helps to gauge the range of fiscal risk.

Keywords: tax gap; systemic banking risk; off-balance sheet liabilities; Fiscal sustainability; Soutenabilité budgétaire; engagements hors-bilan; écart fiscal; risque bancaire systémique (search for similar items in EconPapers)
Date: 2012-11
New Economics Papers: this item is included in nep-ban, nep-cba and nep-rmg
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00755705v1
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Published in 2012

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Related works:
Journal Article: Fiscal sustainability in the presence of systemic banks: the case of EU countries (2014)
Working Paper: Fiscal Sustainability in the Presence of Systemic Banks: the Case of EU countries (2014)
Working Paper: Fiscal Sustainability in the Presence of Systemic Banks: the Case of EU countries (2014)
Working Paper: Fiscal Sustainability in the Presence of Systemic Banks: the Case of EU Countries (2013)
Working Paper: Fiscal Sustainability in the Presence of Systemic Banks: The Case of EU Countries (2012)
Working Paper: Fiscal sustainability in the presence of systemic banks: the case of EU countries (2012)
Working Paper: Fiscal Sustainability in the Presence of Systemic Banks: the Case of EU Countries (2012)
Working Paper: Fiscal Sustainability in the Presence of Systemic Banks: the Case of EU Countries (2012)
Working Paper: Fiscal Sustainability in the Presence of Systemic Banks: the Case of EU Countries (2012)
Working Paper: Fiscal Sustainability in the Presence of Systemic Banks: the Case of EU Countries (2012)
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