The SGP–Faulty by Design or Made Faulty by Politicians? An
Assessment Based on a Simulation Model

J 2014

The SGP–Faulty by Design or Made Faulty by Politicians? An Assessment Based on a Simulation Model

HORÁKOVÁ, Šárka a Robert JAHODA

Základní údaje

Originální název

The SGP–Faulty by Design or Made Faulty by Politicians? An Assessment Based on a Simulation Model

Autoři

HORÁKOVÁ, Šárka (203 Česká republika, domácí) a Robert JAHODA (203 Česká republika, garant, domácí)

Vydání

Review of Economic Perspectives, Masarykova univerzita, 2014, 1213-2446

Další údaje

Jazyk

angličtina

Typ výsledku

Článek v odborném periodiku

Obor

50200 5.2 Economics and Business

Stát vydavatele

Česká republika

Utajení

není předmětem státního či obchodního tajemství

Odkazy

URL

Kód RIV

RIV/00216224:14560/14:00076601

Organizační jednotka

Ekonomicko-správní fakulta

DOI

http://dx.doi.org/10.2478/revecp-2014-0013

UT WoS

000446806400004

Klíčová slova anglicky

Fiscal policy; primary balance; public debt; European Monetary Union; Stability and Growth Pact; fiscal sustainability

Příznaky

Mezinárodní význam, Recenzováno

Změněno: 9. 4. 2015 10:46, Mgr. et Mgr. Nikol Zachovalová Barochová

Anotace

V originále

By joining the European Monetary Union (the “EMU”), member countries lost the ability to use monetary policy as a tool for macroeconomic regulation. The attention was then focused on regulation of fiscal policy and Stability and Growth Pact (the “SGP”) was the instrument agreed upon. The states of the EMU have agreed to meet the 3% of GDP requirement for the maximum annual public budget deficit. Based on evolution of public debt in member countries, we can say that the SGP has failed as a tool for fiscal discipline. In this paper, we answer the question of whether the failure was due to the incorrect concept of the SGP or whether the development of the debt was affected more by arbitrary disrespect of the agreed rules. The two reasons mentioned above are interdependent. To separate them, we construct a dynamic model of EU countries’ public debt. By using real data, we simulate the potential values of public debt in a situation where the SGP rules have been respected in recent years. Comparing the results for the potential debt given by simulation of the model with the current real values, we are able to quantify the impact of non-compliance for each country. The initial results indicate that there are both EU states where non-compliance led to a negligible increase in public debt – up to 7% of GDP – and other states where this factor caused the growth of public debt by more than 30% of GDP.

Návaznosti

MUNI/A/0784/2013, interní kód MU

Název: Vybrané aspekty hodnocení efektivnosti a zásluhovosti veřejných politik (Akronym: Aspekty VEPO)

Investor: Masarykova univerzita, Vybrané aspekty hodnocení efektivnosti a zásluhovosti veřejných politik, DO R. 2020_Kategorie A - Specifický výzkum - Studentské výzkumné projekty

Citovat

HORÁKOVÁ, Šárka a Robert JAHODA. The SGP–Faulty by Design or Made Faulty by Politicians? An Assessment Based on a Simulation Model. Review of Economic Perspectives. Masarykova univerzita, 2014, roč. 14, č. 3, s. 249-265. ISSN 1213-2446. Dostupné z: https://dx.doi.org/10.2478/revecp-2014-0013.

@article{1199275,
   author = {Horáková, Šárka and Jahoda, Robert},
   article_number = {3},
   doi = {http://dx.doi.org/10.2478/revecp-2014-0013},
   keywords = {Fiscal policy; primary balance; public debt; European Monetary Union; Stability and Growth Pact; fiscal sustainability},
   language = {eng},
   issn = {1213-2446},
   journal = {Review of Economic Perspectives},
   title = {The SGP–Faulty by Design or Made Faulty by Politicians? An Assessment Based on a Simulation Model},
   url = {http://nho.econ.muni.cz/14-2014/3-2014/sgp-%E2%80%93-faulty-design-or-made-faulty-politicians-assessment-based-simulation-model},
   volume = {14},
   year = {2014}
}

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JF  - Review of Economic Perspectives
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EP  - 249-265
PB  - Masarykova univerzita
SN  - 12132446
KW  - Fiscal policy
KW  - primary balance
KW  - public debt
KW  - European Monetary Union
KW  - Stability and Growth Pact
KW  - fiscal sustainability
UR  - http://nho.econ.muni.cz/14-2014/3-2014/sgp-%E2%80%93-faulty-design-or-made-faulty-politicians-assessment-based-simulation-model
L2  - http://nho.econ.muni.cz/14-2014/3-2014/sgp-%E2%80%93-faulty-design-or-made-faulty-politicians-assessment-based-simulation-model
N2  - By joining the European Monetary Union (the “EMU”), member countries lost the ability to use monetary policy as a tool for macroeconomic regulation. The attention was then focused on regulation of fiscal policy and Stability and Growth Pact (the “SGP”) was the instrument agreed upon. The states of the EMU have agreed to meet the 3% of GDP requirement for the maximum annual public budget deficit. Based on evolution of public debt in member countries, we can say that the SGP has failed as a tool for fiscal discipline. In this paper, we answer the question of whether the failure was due to the incorrect concept of the SGP or whether the development of the debt was affected more by arbitrary disrespect of the agreed rules. The two reasons mentioned above are interdependent. To separate them, we construct a dynamic model of EU countries’ public debt. By using real data, we simulate the potential values of public debt in a situation where the SGP rules have been respected in recent years. Comparing the results for the potential debt given by simulation of the model with the current real values, we are able to quantify the impact of non-compliance for each country. The initial results indicate that there are both EU states where non-compliance led to a negligible increase in public debt – up to 7% of GDP – and other states where this factor caused the growth of public debt by more than 30% of GDP.
ER  -

HORÁKOVÁ, Šárka a Robert JAHODA. The SGP–Faulty by Design or Made Faulty by Politicians? An Assessment Based on a Simulation Model. \textit{Review of Economic Perspectives}. Masarykova univerzita, 2014, roč.~14, č.~3, s.~249-265. ISSN~1213-2446. Dostupné z: https://dx.doi.org/10.2478/revecp-2014-0013.

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