Public Debat and Fiscal Policies in the Euro Area and Other OECD Countries

Main funder

Funder's project number: 269339

Funds granted by main funder (€)

116 962,00

Funding program

Academy Project, AoF (Academy of Finland)

Project timetable

Project start date: 01/09/2013

Project end date: 31/08/2017


This project aims to improve our understanding on the connections between fiscal policy variables,
especially the public debt to GDP ratio and the public budget deficit to GDP ratio and the
macroeconomic performance on one hand, and on the role of country specific determinants
affecting the sovereign debt premia on the other hand. We analyze what kind of short- and long-
term differences are there in the fiscal adjustment processes amongst the euro area countries and
between the euro area and other OECD countries. In addition, we wish to find out the relevant time
spans for each country regarding their public debt adjustment process, and the reasons for the
differences in these time spans for each country. Furthermore, we study the long-run fundamental
determinants of the sovereign risk premium, and the roles of national central banks and the
possibility to bail-out, demographics, the overall long-run competitiveness of the country, the overall
indebtedness of private and public sectors, political stability, and the net indebtedness of the
country in affecting the premia.
The fundamental idea in our project is that there are many sources of differences in the public debt
sustainability comparisons between different countries, and that especially in the modeling of
sovereign debt premia, the country-specific differences in terms of the long- and short-run effects of
macroeconomic performance and all the other prominently relevant factors have to be carefully
taken into account in these comparisons. All our analyses will utilize modern time series and panel
econometric tools and extensive data sets from the euro area and other OECD countries. We will use
long samples (around 1970 – 2012) of monthly and quarterly time series on public debts, deficits,
real rates of interest, real growth rates, and other relevant macroeconomic and financial market
variables from the euro area and other OECD countries for our analyses.

Principal Investigator

Other persons related to this project (JYU)

Contact person (yes/no): No

Primary responsible unit

Last updated on 2018-23-05 at 10:05