Assessing non-linearities and heterogeneity in debt sustainability analysis: A panel spline approach

Owusu B, Bökemeier B, Greiner A (2021) Universität Bielefeld Working Papers in Economics and Management; 10-2021.
Bielefeld: Bielefeld University, Department of Business Administration and Economics.

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Abstract / Bemerkung
This paper empirically studies public debt sustainability with the penalized panel splines approach for 25 EU economies from 2000 to 2019 by estimating the response of the primary surplus to lagged debt relative to GDP, respectively. A positive coecient on average indicates sustainable policies, which is supported by all our results. Moreover, we show that this relationship is not homogeneous across the distribution of the debt ratios, but, varies with the magnitude of public debt to GDP. The estimations reveal a strongly increasing reaction for small and high debt ratios while it is rather flat for intermediate levels. This holds for normal times, too, whereas during years of economic crises a monotonously increasing response can be observed. Additionally, for a cluster consisting of smaller EU economies, there is indication of 'fiscal fatigue', meaning that the effort of active fiscal counter-steering peters out for high ratios of public debt to GDP. The same effect can be observed for the whole sample and for a sample including the large EU economies, once Greece is removed.
Stichworte
Debt sustainability; fiscal response function; panel spline estimation
Erscheinungsjahr
2021
Serientitel
Universität Bielefeld Working Papers in Economics and Management
Band
10-2021
Seite(n)
27
ISSN
2196-2723
Page URI
https://pub.uni-bielefeld.de/record/2954860

Zitieren

Owusu B, Bökemeier B, Greiner A. Assessing non-linearities and heterogeneity in debt sustainability analysis: A panel spline approach. Universität Bielefeld Working Papers in Economics and Management. Vol 10-2021. Bielefeld: Bielefeld University, Department of Business Administration and Economics; 2021.
Owusu, B., Bökemeier, B., & Greiner, A. (2021). Assessing non-linearities and heterogeneity in debt sustainability analysis: A panel spline approach (Universität Bielefeld Working Papers in Economics and Management, 10-2021). Bielefeld: Bielefeld University, Department of Business Administration and Economics. https://doi.org/10.4119/unibi/2954860
Owusu, B., Bökemeier, B., and Greiner, A. (2021). Assessing non-linearities and heterogeneity in debt sustainability analysis: A panel spline approach. Universität Bielefeld Working Papers in Economics and Management, 10-2021, Bielefeld: Bielefeld University, Department of Business Administration and Economics.
Owusu, B., Bökemeier, B., & Greiner, A., 2021. Assessing non-linearities and heterogeneity in debt sustainability analysis: A panel spline approach, Universität Bielefeld Working Papers in Economics and Management, no.10-2021, Bielefeld: Bielefeld University, Department of Business Administration and Economics.
B. Owusu, B. Bökemeier, and A. Greiner, Assessing non-linearities and heterogeneity in debt sustainability analysis: A panel spline approach, Universität Bielefeld Working Papers in Economics and Management, vol. 10-2021, Bielefeld: Bielefeld University, Department of Business Administration and Economics, 2021.
Owusu, B., Bökemeier, B., Greiner, A.: Assessing non-linearities and heterogeneity in debt sustainability analysis: A panel spline approach. Universität Bielefeld Working Papers in Economics and Management, 10-2021. Bielefeld University, Department of Business Administration and Economics, Bielefeld (2021).
Owusu, Benjamin, Bökemeier, Bettina, and Greiner, Alfred. Assessing non-linearities and heterogeneity in debt sustainability analysis: A panel spline approach. Bielefeld: Bielefeld University, Department of Business Administration and Economics, 2021. Universität Bielefeld Working Papers in Economics and Management. 10-2021.
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2021-05-18T09:12:38Z
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