A Methodology for Calculating the Structural Public Deficit. Its Application to the Case of France in 2020
The Conversation (French edition) 16 February 2021
7 Pages Posted: 25 Feb 2021 Last revised: 4 Aug 2022
Date Written: February 16, 2021
Abstract
This paper gives a comprehensive methodology for assessing the structural public deficit i.e. the public deficit not linked to short term developments in the economic cycle, which is one of the key budgetary indicators of the Stability and Growth Pact adopted in the Eurozone and probably the best indicator of public deficit worldwide. Contrary to the nominal deficit the structural deficit is not immediately quantifiable and thus gives way to spectacular retrospective revisions or even public accounting creativity.Applying our methodology to the case of France in 2020 we show that the official valuation of the structural public deficit at 0,6% of GDP is fanciful, far below the reality around 5%. Therefore with the highest level of compulsory levies in OCDE, France will have no other choice but to cut public expenditure in the coming years.
Keywords: Budgetary Policy,Fiscal Policy,Social Security system,Public Deficit,Structural Public Deficit,Tax
JEL Classification: H6,E62
Suggested Citation: Suggested Citation