Debt, deficits, and the accession of the new member States to the Euro

Hallett, Andrew Hughes; Lewis, John

doi:10.1016/j.ejpoleco.2006.01.002

Cited by 18 publications

(4 citation statements)

References 8 publications

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“…In this respect the Maastricht 60% debt benchmark itself could influence the dynamics of the indebtedness as in several countries debt was kept relatively low prior to accession but its growth accelerated after 2004 as a negative complement to the economic catch-up after accession. This empirical evidence is in accord with Hughes Hallett and Lewis (2007) who "find that the nominal Maastricht criteria are at best irrelevant, and may be damaging for the duration of the catch-up process and well past any likely dates for Eurozone entry. "…”

Section: Deficit and Debtsupporting

confidence: 78%

Public Investment and Fiscal Performance in New EU Member States

Hanousek

Kočenda

2010

SSRN Journal

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In this paper we analyze the dynamics of public investment and public finance in new members of the European Union, and also how these sectors were affected by changes in economic freedom and corruption. When we assess the role of regulation and corruption on public investment, we find that improvements in economic freedom tend to be associated with decreases in public investment, while reductions in corruption produce effects going in both directions. Similarly, we show that increases in public investment are often linked with decreases as well as increases in corruption. In terms of public finance we detect mostly improvement in debt when there is less economic regulation, while results for a deficit are less conclusive. On the other hand, improvements in the corruption environment are mostly associated with decreases in the deficit as well as debt. As a general rule that follows from our results, steps aimed at reducing corruption and the degree of economic regulation should lead towards improvements in the fiscal position in most of the new EU countries.

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Section: Deficit and Debtsupporting

confidence: 78%

Public Investment and Fiscal Performance in New EU Member States

Hanousek

Kočenda

2010

SSRN Journal

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“…In the existing literature, several papers argue that the government is subject to a present value borrowing constraint (e.g., Hamilton & Flavin,1986;Trehan & Walsh, 1991;Alfonso & Rault, 2007;Hallett & Lewis, 2007), which establishes that the present value of the current stock of sovereign debt is identical to the present value of future fiscal balances. The government's borrowing constraint can be derived as follows.…”

Section: Fiscal Sustainabilitymentioning

confidence: 99%

Fiscal Sustainability of Eurozone Governments: An Empirical Review of the Past Decade

Ayala¹,

Blazsek²

2014

RES

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We provide an empirical review of fiscal sustainability of Eurozone governments by using quarterly data on debt to Gross Domestic Product (GDP) and primary deficit to GDP over the period 1999 to 2010. We verify the conditions of fiscal sustainability, defined by the government's present value borrowing constraint, by applying unit root tests that involve one, two, or multiple structural breaks. We select the best performing model of structural breaks and group Eurozone governments with respect to fiscal sustainability.

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“…Wagner (2006) and Orban and Szapáry (2004) point out that reducing the budget deficit to a sufficient extent and at the same time meeting the need for infrastructure investments to promote real convergence may prove difficult. Hughes Hallet and Lewis (2007) argue that some of the accession countries may violate the SGP. Nonetheless, Orban and Szapáry (2004) argue that catching-up economies such as these could run higher deficits than more developed countries without jeopardising the long term sustainability of public finances.…”

Section: (Iv) New Members' Behaviourmentioning

confidence: 99%

The effects of uncertainty about countries’ compliance with the Stability and Growth Pact

Ferré

2012

Journal of Policy Modeling

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The Stability and Growth Pact (SGP) was established to govern discretionary fiscal policy in the European Monetary Union. This article studies the effects created when there is uncertainty about the members' commitment to respecting the established deficit limits in the SGP. We will show that, even if countries respect the SGP deficit ceiling, the presence of uncertainty about their compliance will bring about higher volatility in key economic variables, which could, in turn, affect unemployment and growth negatively. This finding shows that it is important to reduce uncertainty about the members' commitment towards the SGP.

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Debt, deficits, and the accession of the new member States to the Euro

Cited by 18 publications

References 8 publications

Public Investment and Fiscal Performance in New EU Member States

Public Investment and Fiscal Performance in New EU Member States

Fiscal Sustainability of Eurozone Governments: An Empirical Review of the Past Decade

The effects of uncertainty about countries’ compliance with the Stability and Growth Pact

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