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Measuring Sustainability: Benefits and Pitfalls of Fiscal Sustainability Indicators

34 Pages Posted: 6 Jul 2014  

Debora Valentina Malito

European University Institute

Date Written: July 2014

Abstract

The concept of sustainability emerged on the global governance agenda during the 1970s, when, the economic crisis put the spotlight on environmental and social risks associated with economic growth. Although much has been written about it, the literature on pillars, dimensions and measures of sustainability has developed quite independently from the discussions on the idea of sustainability as a set of interlinked and interdependent concentric thematic circles (that is its environmental, social, economic and institutional dimensions). Beginning with this conceptual debate, the present paper argues that indicators of fiscal sustainability are caught between demands of a solvency criterion and the principles of inter- and intra-generational equity. Bypassing their function as a mere representation of reality, these indicators have played a key role in de facto regulating the current fiscal crisis and in eclipsing the other dimensions of sustainability. To discuss this argument, the paper’s first section explores the literature on sustainability indicators and composite indices of sustainable development. Its second part focuses on indicators of fiscal sustainability evaluating concepts, measures and demands. The third part gives insight into two measures, the United Nations’ (UN) Debt to GNI ratio and the European Union’s (EU) fiscal sustainability gap indicators. The fourth part concludes by summarising conceptual, normative and ontological questions.

Keywords: Economic and Financial Crisis , Sustainable Public Finances, Sustainable Development, GDP, Debt.

Suggested Citation

Malito, Debora Valentina, Measuring Sustainability: Benefits and Pitfalls of Fiscal Sustainability Indicators (July 2014). Robert Schuman Centre for Advanced Studies Research Paper No. RSCAS 2014/77. Available at SSRN: https://ssrn.com/abstract=2462512 or http://dx.doi.org/10.2139/ssrn.2462512

Debora Valentina Malito (Contact Author)

European University Institute ( email )

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