Gianluca Cafiso & Roberto Cellini , 2013.
"Fiscal Consolidations and Public Debt in Europe,"
CEPII Working Paper 2013- 35 , November 2013 , CEPII.
The objective of this paper is to gain insights into the relationship between deficit-reducing policies and the evolution of the debt/GDP ratio. We consider past events of fiscal consolidation in a selected group of EU countries and check what is the associated change of the debt/GDP ratio both from a short and medium-term perspective. As for the medium-term perspective, we do also differentiate between tax-based and savings-based fiscal consolidations. Our results point towards a positive short-term effect, while the medium-term effect turns out to be negative. Savingsbased fiscal consolidations result to be less negative on the debt/GDP ratio’s evolution than tax-based ones.
Fiscal consolidations ; debt/GDP ratio ; Europe