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

26 Pages Posted: 27 Feb 2012 Last revised: 21 Mar 2012

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: February 15, 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 favourable 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: H63, E63

Suggested Citation

Cafiso, Gianluca and Cellini, Roberto, Evidence on Fiscal Consolidations and the Evolution of Public Debt in Europe (February 15, 2012). Available at SSRN: https://ssrn.com/abstract=2011869 or http://dx.doi.org/10.2139/ssrn.2011869

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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