Prague Economic Papers 2009, 18(2):114-130 | DOI: 10.18267/j.pep.345
Primary balance, public debt and fiscal variables in postsocialist members of the european union
- Faculty of Finance and Accounting, University of Economics, Prague (izak@vse.cz).
The primary balance has influenced the unit costs of debt servicing in 10 postsocialist members of the EU. The effects of the GDP growth and the inflation are equally robust and significant. The coefficients of lagged debt are at variance with the expectations from Bohn's 1998 paper, and one cannot speak until now about the corrective actions of fiscal authorities in these countries. Only Poland has had on average a higher real long-term interest rate than the growth rate. Other countries could stabilize their debt-GDP ratio by running a primary deficit. But comparing the level of investment with profits only in Slovenia one can speak about the dynamic inefficiency. Especially in the Czech Republic and Slovakia the relationship between debt and deficit is blurred by high negative stock-flow adjustments.
Keywords: public debt, primary balance, panel analysis, postsocialist members of EU
JEL classification: E62, H63
Published: January 1, 2009 Show citation
References
- Abel A., Mankiw G., Summers L., Zeckhauser R. (1989), "Assessing Dynamic Efficiency: Theory and Evidence." Review of Economic Studies. No. 1.
Go to original source...
- Ardagna S., Caselli F., Lane T. (2004), "Fiscal Discipline and the Cost of Public Debt Service: Some Estimates for OECD Countries." NBER WP 10788.
Go to original source...
- Balassone F., Franco D. (2000), "Assessing Fiscal Sustainability: A Review of Methods with a View to EMU." Fiscal Sustainability, Perugia, Bank of Italy.
Go to original source...
- Ball L., Elmendorf D., Mankiw G. (1998), "The Deficit Gamble". Journal of Money, Credit and Banking. No. 4.
Go to original source...
- Blanchard O. (1990), Suggestions for a New Set of Fiscal Indicators. OECD, WP No.69.
Go to original source...
- Bohn H. (1998), "The Behavior of U.S. Public Debt and Deficits." The Quarterly Journal of Economics. No. 3.
Go to original source...
- Caselli F., Giovannini A., Lane T. (1998), "Fiscal Discipline and the Cost of Public Debt Service: Some Estimates for OECD Countries." IMF WP 98/55.
Go to original source...
- Croce E., Juan Ramon H. (2003), "Assessing Fiscal Sustainability: A Cross- Country Comparison." IMF WP 03/145.
Go to original source...
- Diamond P. (1965), "National Debt in a Neoclassical Growth Model." American Economic Review. No. 1, Part 1.
- EC (2008), " European Economy-Public Finances in EMU, 2000-2007." Brussels, European Commission.
- EUROSTAT (2007), "Government Finance Statistics." Eurostat, Summary Tables 2/2007.
- Kogler-Toglhofer W., Zogler M. (2004), "The Impact of Different Fiscal Policy Regimes on Public Debt Dynamics. Public Debt." Perugia, Bank of Italy.
- Lebow D. (2004), "Recent Fiscal Policy in Selected Industrial Countries." BIS, Basel. WP No. 162.
- Martner R., Tromben V. (2004), "Public Debt Indicators in Latin American Countries: Snowball Effect, Currency Mismatch and the Original Sin." Public Debt, Perugia, Bank of Italy.
Go to original source...
- Obstfeld M., Rogoff K. (1996), Foundations of International Macroeconomics. Cambridge, Massachusetts.
- Phelps E. (1961), "The Golden Rule of Accumulation: A Fable for Growthmen." American Economic Review. No. 4.
- Romer D. (2004), Advanced Macroeconomics. New York, Mc Graw-Hill.
- Eurostat (2007), Statistical Annex. Eurostat, Autumn 2007.
- EC (2006), The Long-term Sustainability of Public Finances in the European Union. Brussels: European Commission.
- IMF (2003), World Economic Outlook. IMF Washington, September 2003.
- IMF (2004), World Economic Outlook. IMF Washington, September 2004.
This is an open access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY NC ND 4.0), which permits non-comercial use, distribution, and reproduction in any medium, provided the original publication is properly cited. No use, distribution or reproduction is permitted which does not comply with these terms.