Evidence on Fiscal Consolidations and the Evolution of Public Debt in Europe

27 Pages Posted: 2 Jan 2013

See all articles by Gianluca Cafiso

Gianluca Cafiso

University of Catania - Department of Economics and Business

Roberto Cellini

University of Catania - Department of Economics and Business

Multiple version iconThere are 2 versions of this paper

Date Written: December 28, 2012

Abstract

The objective of this paper is to gain insights into the relationship between deficit-reducing policies and the evolution of the debt/GDP ratio. We consider past events of fiscal consolidation in a selected group of EU countries, by using the new data set recently made available by Devries et al. (2011), and check what is the associated change of the debt/GDP ratio both from a short and medium-term perspective. Our results show that a favorable short-term response emerges in the majority of the countries considered, while the medium-term one is adverse for all. The analysis provides information to assess the convenience of deficit-reducing policies to contain or invert the evolution of the debt/GDP ratio.

Keywords: fiscal consolidation, debt/GDP ratio, European Union

JEL Classification: H630, E630

Suggested Citation

Cafiso, Gianluca and Cellini, Roberto, Evidence on Fiscal Consolidations and the Evolution of Public Debt in Europe (December 28, 2012). CESifo Working Paper Series No. 4027, Available at SSRN: https://ssrn.com/abstract=2195462

Gianluca Cafiso (Contact Author)

University of Catania - Department of Economics and Business ( email )

Corso Italia 55
Catania, 95129
Italy
+39 095 7537 745 (Phone)

HOME PAGE: http://sites.google.com/site/giancafiso/

Roberto Cellini

University of Catania - Department of Economics and Business ( email )

Corso Italia 55
95129 Catania, 95129
Italy
+390957537728 (Phone)
+390957537710 (Fax)

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