Debt Statistics a la Carte: Alternative Recipes for Measuring Government Indebtedness (original) (raw)
Determinants of Public Indebtedness in European Union Countries
e-Finanse
The paper strives to determine the impact of fiscal variables on factors determining the dynamics of public debt in European Union countries. Based on the literature, the dynamics of public debt are determined by changes of three elements: the primary balance, interest-rate-growth-differential and the change of government assets. Therefore, it seems reasonable to estimate the dynamics of these three values to find the variables crucial for limiting the growth of public debt. Three groups of dynamic panel regressions were estimated based on the one-step Generalized Method of Moments. The data was collected for the 1995-2015 period for 27 EU countries. Dependent variables included: primary balance, interest-rate-growth-differential and change of government assets. Independent variables consisted of: interest payable to GDP ratio, unemployment rate, squared unemployment rate, FDI stock to GDP, net FDI inflow to GDP, general government expenditures to GDP, share of social security expen...
Are Greek government deficit and debt statistics reliable?
Journal of economic and social measurement, 2013
The aim of this paper is to analyze the statistical properties of the Greek government deficit and debt figures compiled and reported to the European Commission since 1994 for the period 1991 to 2012. On the basis of successive revisions in reported data, it assesses the reliability of budgetary statistics and derives a number of reliability indicators. According to the standard deviations of revisions between the first outturn and final data, Greece have reported the least reliable deficit figures and have had the largest dispersion of revisions. The paper has also shown that data on the yearly changes in debt have been less reliable than those on the deficit. Whatever the cause of these findings, we believe that they create problems for users of the data.
The Impact of Government Expenditure on the Greek Government Debt: An Econometric Analysis
Mediterranean Journal of Social Sciences, 2013
Sovereign debt crisis in advanced economies keep increasing and its government are implementing fiscal policies to reduce it. Greece is an example of a country whose government debt is a matter of grave concern since it has received the second bailout but still threatens to default. The main aim of this study is determine the impact of government expenditures and government incomes on government debt. This paper estimates the effect of government expenditure on debt in Greece via the vector error correction model framework and granger causality model with annual data from 1976 to 2011 which was collected from the World Development Indicators, European Commission data base and the International Monetary Fund. Vector Error correction Model framework is used to estimate our model and Vector Autoregression Granger causality to determine the direction of causation.The results show a significant negative relationship between gross government debt and gross national income as well as gross government debt and net foreign direct investment. A significant positive relationship is found between gross government debt and gross national expenditure and gross government debt and inflation. The past values of gross national expenditure and gross national income have a predictive ability in determining the present value of gross government debt and not vice versa. Knowing this effects will help policy makers of these countries and the world at larger to revisit its fiscal policy in order to reduce its debt and sustain it.
Greek Fiscal and Financial Data: More than Meets the Eye
Journal of Engineering Science and Technology Review, 2011
Statistical data plays such a vital role in policy-making in all fields of human activity that its quality and reliability is a matter of human well-being. Within today"s severe and unprecedented recession into which Greece seems steadily sinking, accuracy of national statistics has become as decisive for her survival as ever before. Our country"s potential to rise above the present situation for the good of Greece"s and eurozone citizens depends heavily on truthfully putting our statistics "in order", something which is not currently happening. Fiscal and financial statistics may in general offer the greatest example of the principle "garbage in, garbage out". The issue is that users cannot usually assess the presence of garbage simply by reading the press releases, while at the same time they are suffering from the deleterious effects of the wrong-data. This paper uses extensively the concept-mapping approach to investigate basic reliability issues of Greece"s fiscal and financial statistics. The statistical location of the deficit and debt items is sketched out within the European System of Accounts and five data reliability issues are identified. The paper is concluded with proposals on two fundamental reforms required to enable Greek statistics to serve the public good.
The size and composition of government debt in the euro area
2011
This paper explains the various concepts of government debt in the euro area with particular emphasis on its size and composition. In terms of size, the paper focuses on different definitions that are in use, in particular the concept of gross general government debt used in the surveillance of the euro area countries, the total liabilities from the government balance
An econometric analysis of the eurozone sovereign debt crisis : the case of Greece
2012
The European sovereign debt crisis started. in 2008 with the collapse of Iceland's banking system. Subsequently, several European countries faced the implosion of financial institutions, high government debt and rapidly rising bond yield spreads in government securities. In this context, Greece is an example of a country whose government debt is a matter of grave concern since it has received the second bailout but still threatens to default. This is ironic since a developed economy like Greece is considered to aide developing economies. The main aim of this dissertation is to conduct an econometric analysis of the determinants of the Greek sovereign debt crisis while the secondary aim is an extensive literature review of the Eurozone sovereign debt crisis. Regarding the former aim, the variables selected include the government deficit, current account balance, inflation, gross savings and general government debt of Greece. This annual data (from 1976 to 2010) was collected from the World Development Indicators, European Commission data base and the International Monetary Fund. The Vector Error Correction Model framework was used to estimate our model. Also, the Granger causality analysis helped to identify the direction of causation. Furthermore, the Variance Decomposition and the Generalized Impulse Response Function were employed to analyze the shocks of all our variables on each other. Finally, for the latter aim, we critically review the evolution, causes, consequences and cures of the Eurozone sovereign debt crisis and then formulate some suggestions on how to mitigate the effects of this crisis. The results of the econometric analysis show that there is a significant negative relationship between general government debt with government deficit and inflation. However, a significant positive relationship between general government debt and current account balance was found. There is an insignificant negative relationship between gross savings and general government debt. The past value of the general government debt and government deficit has the ability to determine the present value of inflation; and in turn, pass value of inflation, can predict the present value of current account balance and gross savings. Variation in most of our variables is highly explained by our variables itself, with the exception of current account balance where variation is explained mostly by general government debt. The response of general government debt to itself is positive. Gross government debt to government deficit and general government debt to current account balance is negative. General government debt to inflation is positive. A shock of gross government debt has an increasing negative effect on gross savings over the study period. Among the causes of the Eurozone sovereign debt crisis is the rapid growth of government debt levels, trade imbalances, monetary policy inflexibility, and loss of confidence. Consequences of this crisis involve disrupted bond markets and the banking sector, depreciation of the Euro, reduced economic growth, loss of confidence, reduced remittances and tight fiscal measures. Some measures were taken and many are proposed as a cure for this crisis. This dissertation recommends that policies aimed at decreasing the level of general government debt should increase expenditure hence deficit in an income generating investment, increase inflation while decreasing current account balance.
The Determinants Of Public Debt
DOAJ (DOAJ: Directory of Open Access Journals), 2016
The study focuses on the identification of the Europeans public debt determinants. For this analysis, we have taken 12 Europeans countries during the 2000-2014 period. In order to estimate our model, we used the correlated panels corrected standard errors model. The results confirms the persistence of dependant variable i.e. debt-to-GDP ratio. We also found a positive impact of bank nonperforming loans, military expenditures and imports and a negative influence of GDP growth and bank liquid reserves.
SSRN Electronic Journal, 2000
This paper focuses on an econometric investigation of the macroeconomic and political factors that contributed to Greece's excessive debt accumulation and its failure to adequately address its fiscal imbalances, from the restoration of democracy in 1974 till the crisis of 2009. The econometric investigation is based on a model in which two political parties alternate in power, and in which governments choose primary expenditure and taxes to minimize deviations from politically determined expenditure and tax targets, subject to a debt accumulation equation. The model predicts a political equilibrium in which primary expenditure and taxes follow feedback rules which go in the direction of stabilizing the debt to GDP ratio. However, this stabilization incentive is weaker in election years. The model also predicts potential partisan differences in the evolution of primary expenditure and taxes, due to the different preferences of political parties. Estimates of government reaction functions to public debt for the period 1975-2009 suggest a rather weak stabilizing reaction of primary deficits to public debt. This stabilizing reaction disappears in election years, which are characterized by strong fiscal expansions. We find no evidence of partisan differences in the reaction of primary deficits to inherited debt, but we do find evidence of lower primary deficits in the post-1992 Maastricht treaty period. Overall the model accounts for the accumulation of Greece's government debt in terms of the trend increase in primary expenditure, the positive shocks to primary expenditure in election years and the weak stabilizing reaction of government revenue, due to tax smoothing.
Determinants of Government Debt in the Member States of the European Union: Sources of Fiscal Risk
Proceedings of the International Conference on Business Excellence
In times when the national economy needs increased financial support from governments, the fiscal space they have and the determinants of public debt come to the fore. Sudden increases in public spending or significant decreases in public revenue represent fiscal risks, and the level of sovereign debt is a measure to quantify fiscal risk. At international level, banking crises, government guarantees, publicprivate partnerships, companies with majority state capital, and non-performing loans are revealed by history as the main sources of financial crises and fiscal risk. This study aims to identify whether social assistance expenditures, government guarantees, public-private partnerships, non-performing loans, or tax revenues influence the evolution of the government debt of the Member States of the European Union. The data used were taken from Eurostat and were organised as panel data, the analysed period is 2010-2018. To estimate the regressions, we used the Eviews software, and th...
The present study deals with Greek sovereign debt and tries to shed light on its determinants while examining its evolution and severe impact following the global financial crisis that still plagues the country. This paper considers the Greek debt crisis and the efforts taken to deal with it, a combination of Greek austerity measures and strong financial aid from foreign institutions. It also provides a brief examination of public debt formation in the Eurozone countries, emphasizing in ones with the biggest debt ratios. The empirical analysis stresses that, even if the macroeconomic assumptions underpinning the fiscal adjustment program prove realistic and effective, the financial situation of the public sector will remain fragile and has a long way to run. Simultaneously, the enigma of a viable solution to the fiscal problem of Greece won't be solved unless long term and permanent measures are engaged in order to address the long-standing weaknesses of the economy. It is also pointed out that a stable political and economic environment must be ensured alongside with the attraction of investments and world cooperation.