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

Agnès Benassy-Quere and Guillaume Roussellet

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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 on microeconomic data at the bank level. The second one is based on econometric estimations of the probability and the cost of a systemic banking crisis. 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: fiscal sustainability; tax gap; systemic banking risk; off-balance sheet liabilities (search for similar items in EconPapers)
Date: 2014-06
New Economics Papers: this item is included in nep-ban, nep-eec and nep-rmg
Note: View the original document on HAL open archive server: https://hal.science/hal-00825256v1
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Published in International Tax and Public Finance, 2014, 21 (3), pp.436-467. ⟨10.1007/s10797-013-9273-0⟩

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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 (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)
Working Paper: Fiscal Sustainability in the Presence of Systemic Banks: the Case of EU Countries (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00825256

DOI: 10.1007/s10797-013-9273-0

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