Europe’s Debt (Un)Sustainability: Looking Through Bohn’s Magnifying Glass

Aleš Bulíř and Khyati Chauhan

No 2025/070, IMF Working Papers from International Monetary Fund

Abstract: No large European countries and only few small ones have met the so-called Bohn rule during the past 40 years or so. The Bohn rule specifies that past increases of public debt need to be systematically compensated with current and future fiscal surpluses to stabilize debt at some steady-state level. We find that post-1980 European fiscal primary balances have been driven by spending growth and consumption smoothing. The results change little between periods before and after the global financial crisis.

Keywords: Fiscal sustainability; public debt; the Bohn rule (search for similar items in EconPapers)
Pages: 50
Date: 2025-04-04
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