How much can European governments squeeze out of their taxpayers?

Jean-Michel Courtault () and Riccardo Magnani

Working Papers from HAL

Abstract: In this paper we use the notion of distributable surplus, introduced by Allais (1943) and Luenberger (1992), to evaluate the capacity of European countries to repay their debts. In our analysis, we use Computable General Equilibrium (CGE) models to simulate di erent policies that can be implemented to achieve debt sustainability. We rst evaluate the quantity of distributable surplus that can be extracted from policies aiming at increasing the quantity of labor and/or capital available in the economy. We show that the results are very sensitive whether we consider de cits before and after the recent nancial and economic crises. Then, assuming that governments are able to capture all the distributable surpluses, we compute the date at which they are able to repay their debts. In particular, we nd that most EU countries, excepted Germany and to lesser extent France and the UK, cannot achieve debt sustainability. We nally discuss the usefulness of Eurobonds.

Keywords: CGE models; Distributable surplus; public de cit; sovereign debt; debt sustainability; CGE models. (search for similar items in EconPapers)
Date: 2012-10-23
Note: View the original document on HAL open archive server: https://hal.science/hal-00744544v2
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Related works:
Journal Article: How much can European governments squeeze out of their taxpayers? (2014)
Working Paper: How much can European governments squeeze out of their taxpayers? (2014)
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