When is Austerity Ineffective?

Marattin, Luigi (2013) When is Austerity Ineffective? Bologna: Dipartimento di Scienze economiche - DSE, DOI 10.6092/unibo/amsacta/3679. In: Quaderni - Working Paper DSE (880). ISSN 2282-6483.
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Abstract

This paper offers a formal analysis of the relationship between changes in government primary balance and debt-to-GDP ratio. it establishes the conditions under which a fiscal consolidation increases - instead of decreasing - the stock of government liabilities relative to aggregate output. A crucial role is played by the relationship between the elasticities of average cost of debt and nominal output to primary balance: while the former depends on debt maturity and risk premia dynamics, the latter relates to the well-known controversy on the size of government spending multipliers. The paper shows an application to the ongoing fiscal consolidation process in the Eurozone.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Marattin, Luigi
Keywords
debt-to-GDP ratio, debt sustainability, government budget
Subjects
ISSN
2282-6483
DOI
Deposit date
22 May 2013 09:15
Last modified
03 Oct 2013 07:55
URI

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