Recurrent explosive public debts and the long-run fiscal sustainability |
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| Institution: | 1. CeRP-Collegio Carlo Alberto and Ufficio Studi Compagnia, San Paolo, Italy;2. University of Turin, Dep. of Economics and Statistics, Turin, Italy;3. University of Insubria, Dep. of Economics, Varese, Italy;4. ISER University of Essex, United Kingdom, CeRP-Collegio Carlo Alberto, Turin, Italy and Dondena-University Bocconi, Milan, Italy;1. Pace University, United States;2. York College, United States;3. William Patterson University, United States;1. Université Paris-Est, IRG (EA 2354), UPEC, UPEM, Pôle du Bois de l''Étang, 5 Bd Descartes, Bureau C241A, F-77454 Marne-la-Vallée, France;2. EM Normandie Business School, Métis Lab, Paris, France;3. Institut de Recherche en Gestion (EA 2354), Université Paris Est, Créteil, France;4. College of Business Administration, King Saud University, Saudi Arabia;1. 805, Hilife Magnifique, Varthur Panathur Road, Balagere, Bangalore 560087, India;2. Xavier School of Management (XLRI), CH Area (East), Jamshedpur 831001, India;1. Department of Economics and Finance, University of Rome Tor Vergata, Via Columbia 2, Rome 00133, Italy;2. Department of Management and Law, University of Rome Tor Vergata, Via Columbia 2, Rome 00133 Italy;3. Department of Economics and Business, University of Cagliari, V.le S.Ignazio 17, Cagliari 09123, Italy;4. Institute for Prospective Technological Studies, JRC-European Commission, Seville, Spain |
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| Abstract: | In this paper, the dynamics of debt-to-GDP ratio is analyzed for three countries with long fiscal records: Sweden, the UK and the US. A novel procedure of testing for recurrent explosive behavior is implemented in order to identify episodes of explosive debt dynamics. The detected periods of explosive debt growth can be attributed to changes in economic, political and institutional environment which required active policy responses subsequently followed by fiscal adjustments. The results of the study indicate that the long-run sustainability found for these countries in other studies can be interpreted as the outcome of fluctuating fiscal policies, some of which were unsustainable. |
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| Keywords: | Public debt Fiscal sustainability Explosiveness |
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