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Sustainability of public debt: An example of selected European Union countries

Year 2022, Volume: 36 Issue: 2, 195 - 202, 22.04.2022

Abstract

The 2008 Mortgage crisis that emerges in the United States affected almost all countries in the world. Following this effect, a new crisis, namely the debt crisis, appeared in Europe. Greece, Spain, Italy, Ireland and Portugal have been the country’s most strongly affected by this crisis. As a consequence of the 2008 global financial crisis, the sustainability of increasing public debt has been a matter of debate. Within this context, in the study, the sustainability of public debt for the European Union countries with the highest public debt was examined with the help of different unit root tests using the annual data of 1995-2018. Based on the results of the study, public debt in the investigated countries was found to be sustainable.

References

  • Lee, C., Wu, J-L. and Yang, L. (2015), A Simple Panel Unit-Root Test with Smooth Breaks in the Presence of a Multifactor Error Structure, Oxford Bulletin of Economics and Statistics, 78/3, 365-393.
  • Lukkezen, J., Rojas-Romagosa, H. (2013), Stochastic debt sustainability indicators. Revue de l'OFCE 97–121.
  • Medeiros, J. (2012), Stochastic Debt Simulation Using VAR Models and a Panel Fiscal Reaction function: Results For a Selected Number of Countries. European Economy, 459 Economic Paper.
  • Mendoza, E. G., Ovied, P. M. (2004), Fiscal Solvency and Macroeconomic Uncertainty in Emerging Markets: The Tale of the Tormented Insure. NBER Working Paper.
  • Nazlıoğlu, Ş. (2010), Makro İktisat Politikalarının Tarım Sektörü Üzerindeki Etkisi: Gelişmiş ve Gelişmekte Olan Ülkeler İçin Bir Karşılaştırma. Erciyes Üniversitesi, Sosyal Bilimler Enstitüsü, (Yayımlanmamış Doktora Tezi), 104. Nazlioglu, Şaban and Karul, Cagın (2017), A Panel Stationarity Test with Gradual Structural Shifts: Re-Investigate the International Commodity Price Shocks, Economic Modelling, 61, p. 181- 192.
  • Ono, H. (2008), Searching for Non-Linear Effects and Fiscal Sustainability in G-7 Countries. Applied Economics Letters, Vol (15), 457-460, https://doi.org/10.1080/13504850600706248.
  • Özcan, B. (2012), İşsizlik Histerisi Hipotezi OECD Ülkeleri İçin Geçerli Mi? Yapısal Kırılmalı Birim Kök Analizi. Erciyes Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, Sayı: 40, Haziran-Aralık 2012, 95-117.
  • Pan, C., Chang, T., Wolde, R. Y. (2015), Military Spending and Economic Growth in the Middle East Countries: Bootstrap Panel Causality Test. Defence and Peace Economics, 26 (24), 443-456, https://doi.org/10.1080/10242694.2014.891356.
  • Pesaran, M. H. (2004), General Diagnostic Tests for Cross Section Dependence in Panels. Institute for the Study of Labor Working Papers, No:1240.
  • Pesaran, M. H. (2007), A Simple Panel Unit Root Test in The Presence of Cross‐ Section Dependence. Journal of Applied Econometrics, 22(2), 265-312, https://doi.org/10.1002/jae.951.
  • Pesaran, M. H., Ullah, A., Yamagata, T. (2008), A Bias‐ Adjusted LM Test of Error Cross‐ Section Independence. The Econometrics Journal, 11(1), 105-127, DOI: 10.1111/j.1368-423X.2007.00227.x.

Kamu borcunun sürdürülebilirliği: Seçilmiş Avrupa Birliği ülkeleri örneği

Year 2022, Volume: 36 Issue: 2, 195 - 202, 22.04.2022

Abstract

The 2008 Mortgage crisis that emerges in the United States affected almost all countries in the world. Following this effect, a new crisis, namely the debt crisis, appeared in Europe. Greece, Spain, Italy, Ireland and Portugal have been the country’s most strongly affected by this crisis. As a consequence of the 2008 global financial crisis, the sustainability of increasing public debt has been a matter of debate. Within this context, in the study, the sustainability of public debt for the European Union countries with the highest public debt was examined with the help of different unit root tests using the annual data of 1995-2018. Based on the results of the study, public debt in the investigated countries was found to be sustainable.

References

  • Lee, C., Wu, J-L. and Yang, L. (2015), A Simple Panel Unit-Root Test with Smooth Breaks in the Presence of a Multifactor Error Structure, Oxford Bulletin of Economics and Statistics, 78/3, 365-393.
  • Lukkezen, J., Rojas-Romagosa, H. (2013), Stochastic debt sustainability indicators. Revue de l'OFCE 97–121.
  • Medeiros, J. (2012), Stochastic Debt Simulation Using VAR Models and a Panel Fiscal Reaction function: Results For a Selected Number of Countries. European Economy, 459 Economic Paper.
  • Mendoza, E. G., Ovied, P. M. (2004), Fiscal Solvency and Macroeconomic Uncertainty in Emerging Markets: The Tale of the Tormented Insure. NBER Working Paper.
  • Nazlıoğlu, Ş. (2010), Makro İktisat Politikalarının Tarım Sektörü Üzerindeki Etkisi: Gelişmiş ve Gelişmekte Olan Ülkeler İçin Bir Karşılaştırma. Erciyes Üniversitesi, Sosyal Bilimler Enstitüsü, (Yayımlanmamış Doktora Tezi), 104. Nazlioglu, Şaban and Karul, Cagın (2017), A Panel Stationarity Test with Gradual Structural Shifts: Re-Investigate the International Commodity Price Shocks, Economic Modelling, 61, p. 181- 192.
  • Ono, H. (2008), Searching for Non-Linear Effects and Fiscal Sustainability in G-7 Countries. Applied Economics Letters, Vol (15), 457-460, https://doi.org/10.1080/13504850600706248.
  • Özcan, B. (2012), İşsizlik Histerisi Hipotezi OECD Ülkeleri İçin Geçerli Mi? Yapısal Kırılmalı Birim Kök Analizi. Erciyes Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, Sayı: 40, Haziran-Aralık 2012, 95-117.
  • Pan, C., Chang, T., Wolde, R. Y. (2015), Military Spending and Economic Growth in the Middle East Countries: Bootstrap Panel Causality Test. Defence and Peace Economics, 26 (24), 443-456, https://doi.org/10.1080/10242694.2014.891356.
  • Pesaran, M. H. (2004), General Diagnostic Tests for Cross Section Dependence in Panels. Institute for the Study of Labor Working Papers, No:1240.
  • Pesaran, M. H. (2007), A Simple Panel Unit Root Test in The Presence of Cross‐ Section Dependence. Journal of Applied Econometrics, 22(2), 265-312, https://doi.org/10.1002/jae.951.
  • Pesaran, M. H., Ullah, A., Yamagata, T. (2008), A Bias‐ Adjusted LM Test of Error Cross‐ Section Independence. The Econometrics Journal, 11(1), 105-127, DOI: 10.1111/j.1368-423X.2007.00227.x.
There are 11 citations in total.

Details

Primary Language English
Subjects Economics
Journal Section Makaleler
Authors

Murat Beşer 0000-0002-8487-4586

Publication Date April 22, 2022
Published in Issue Year 2022 Volume: 36 Issue: 2

Cite

APA Beşer, M. (2022). Sustainability of public debt: An example of selected European Union countries. Atatürk Üniversitesi İktisadi Ve İdari Bilimler Dergisi, 36(2), 195-202.

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