Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/300065 
Year of Publication: 
2024
Series/Report no.: 
CESifo Working Paper No. 11137
Publisher: 
CESifo GmbH, Munich
Abstract: 
We assess the drivers of fiscal sustainability in 20 OECD economies between 1950 and 2019. We find stable long-term relationships between government revenues and expenditures as well as between the primary budget balance and past public debt ratio for the full panel. Performing an expanding window analysis, we conclude that the differential between the long-term real interest rate and the real GDP growth rate (r-g) plays a crucial role in fiscal sustainability, as well as the existence of fiscal rules in terms of the budget balance, and also the output gap. The effects of inflation, external accounts balance and fiscal rules on sustainability coefficients à la Hakkio and Rush (1991) and Bohn (1998) are heterogenous. Furthermore, before the global financial crisis of 2008, the effects of the (r-g) differential were particularly strong, and depended on its sign as well as on past debt-to-GDP ratios.
Subjects: 
fiscal sustainability
primary budget balance
public debt
panel data
expanding window
fiscal rules
JEL: 
C23
H61
H63
E62
Document Type: 
Working Paper
Appears in Collections:

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.