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

Agnès Benassy-Quere and Guillaume Roussellet

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

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: Fiscal sustainability; tax gap; systemic banking risk; off-balance sheet liabilities (search for similar items in EconPapers)
JEL-codes: H21 H23 J41 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2012-11
New Economics Papers: this item is included in nep-acc, nep-ban, nep-cba, nep-eec, nep-pbe and nep-rmg
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Published in International Tax and Public Finance, 2014, 21, (3), pp.436-467

Downloads: (external link)
https://shs.hal.science/halshs-00755705 (application/pdf)
https://doi.org/10.1007/s10797-013-9273-0

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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Persistent link: https://EconPapers.repec.org/RePEc:mse:cesdoc:12077

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