Testing for multiple bubbles: historical episodes on the sustainability of public debt in Spain, 1850–2020

Abstract

Purpose This paper aims to analyze the dynamics of the Spanish public debt–gross domestic product ratio during the period 1850–2020. Design/methodology/approach This study uses a recent procedure to test for recurrent explosive behavior (Phillips et al., 2011; Phillips et al., 2015a, 2015b) to identify episodes of explosive public debt dynamics and also the episodes of fiscal adjustments over this long period. Findings The identified episodes of explosive behavior of public debt coincided with fiscal stress events, whereas fiscal adjustments and changes in economic policies stabilized public finances after periods of explosive dynamics of public debt. Originality/value The longer than usual span of the data should allow the authors to obtain some more robust results than in most of previous analyses of long-run sustainability.

Public Debt Sustainability in Indonesia after Financial Crisis and During COVID-19 Pandemic

“…Low solvency risk is also related to fiscal sustainability. Fiscal policy is considered sustainable when it can be maintained long-term and does not violate solvency constraints [30]. The minus SRED value can also be caused by the depreciation of the domestic currency against external currencies, especially the US Dollar.…”