Determinants of the Primary Fiscal Balance: Evidence from a Panel of Countries

Abbas, S. Ali; Belhocine, Nazim; El-Ganainy, Asmaa; Weber, Anke

doi:10.7551/mitpress/9780262027182.003.0008

Cited by 4 publications

(5 citation statements)

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“…The post-World War II consolidations-the largest and, in many countries, the most rapid consolidation episode-saw heterogeneous debt structure changes (Table 6). As noted by Abbas et al (2014), most of these debt reductions occurred in an environment of low, often negative, real interest rates, and strong growth. Negative real interest rates in a number of countries reflected a combination of steady relatively high inflation and financial repression (Reinhart and Sbrancia, 2011).…”

Section: Debt Structure Changes During Large Debt/gdp Decreasesmentioning

confidence: 97%

“…The term "Great (Debt) Accumulation" was coined inAbbas et al (2014), and refers to the period from the early-1970s till the mid-2000s during which public debt (in PPPGDP-weighted average terms) of advanced economies rose by about 40 percentage points, despite the absence of a global crisis. A number of factors combined to deliver this increase: a reduction in the rate of growth from the first three post-World War II decades; the collapse of the Bretton Woods system; the two oil price shocks; and, most notably, the rise of welfare states, and the accompanying permanent increase in government expenditure, in advanced economies.31 China's holdings of U.S. treasury securities rose from 10 percent of total foreign holding in 2003 to 26 percent by 2010(Morrison and Labonte, 2013).©International Monetary Fund.…”

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confidence: 99%

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Sovereign Debt Composition in Advanced Economies: A Historical Perspective

Abbas

Blattner²,

Broeck

et al. 2014

IMF Working Papers

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We examine how the composition of public debt, broken down by currency, maturity, holder profile and marketability, has responded to major debt accumulation and consolidation episodes during 1900-2011. Covering thirteen advanced economies, we focus on debt structure shifts that occurred around the two World Wars and global economic downturns, and the subsequent debt consolidations. Notwithstanding data gaps, we are able to recover some broad common patterns. Episodes of large debt accumulation-essentially, large increases in debt supply-were typically absorbed by increases in short-term, foreign currency-denominated, and banking-systemheld debt. However, this pattern did not hold during the debt build-ups starting in the 1980s and 1990s, which were compositionally skewed toward long-term local-currency debt. We attribute this change to higher structural demand for sovereign paper, linked to capital account liberalization in advanced economies, the emergence of a large contractual saving sector, and innovative sovereign debt products. With regard to debt consolidations, we find support for the financial repression-cum-inflation channel for post World War II debt reductions. However, the scope for a repeat of this strategy appears limited unless financial liberalization and globalization were materially rolled back or the current globally agreed monetary policy regime built around price stability abandoned. Neither are significant favorable structural demand shifts, as witnessed in the 1980s and 1990s, likely.

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Section: Debt Structure Changes During Large Debt/gdp Decreasesmentioning

confidence: 97%

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confidence: 99%

Sovereign Debt Composition in Advanced Economies: A Historical Perspective

Abbas

Blattner²,

Broeck

et al. 2014

IMF Working Papers

Self Cite

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“…Data for the single components are, however, not available for all countries in my sample and only for years after 1994. Transactions in financial assets account for about 98% and adjustments 11 The Japanese public pension fund also accumulated financial assets to a large extent (Abbas et al 2014). …”

Section: Data and Descriptive Statisticsmentioning

confidence: 99%

Creative accounting and electoral motives: Evidence from OECD countries

Reischmann

2016

Journal of Comparative Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractUsing an unbalanced panel of 27 OECD countries over the period 1970-2011, I examine whether electoral motives influenced creative accounting. Governments engage in "below-the-line" operations, such as transactions in financial assets, that do not show up in the deficit figures but give rise to changes in debt. I use the difference between the change in public debt and the deficit (stock-flow adjustment) to measure creative accounting. The results suggest that governments strategically engaged in creative accounting before regular elections so as to sugarcoat the budget balance. I also provide an overview of government interventions that gave rise to large stock-flow adjustments.JEL Code: C23, D72, E62,H61, H62, H63, P16.

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“…Our analysis follows Abbas et al (2011Abbas et al ( , 2014a in decomposing debt changes according to the following debt accumulation equation:…”

Section: Debt Consolidation Before 1913mentioning

confidence: 99%

“…Source: Abbas et al (2014a) and authors' calculations. Notes: Countries included are Australia, Canada, France, Germany, Italy, Japan, the U.K., and the U.S. PPPGDP-weighted averages, cumulative over the episode years.…”

Section: Two Debt Accumulation Episodesmentioning

confidence: 99%

Public Debt Through the Ages

Eichengreen¹,

El-Ganainy²,

Esteves³

et al. 2019

IMF Working Papers

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We consider public debt from a long-term historical perspective, showing how the purposes for which governments borrow have evolved over time. Periods when debt-to-GDP ratios rose explosively as a result of wars, depressions and financial crises also have a long history. Many of these episodes resulted in debt-management problems resolved through debasements and restructurings. Less widely appreciated are successful debt consolidation episodes, instances in which governments inheriting heavy debts ran primary surpluses for long periods in order to reduce those burdens to sustainable levels. We analyze the economic and political circumstances that made these successful debt consolidation episodes possible.

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Determinants of the Primary Fiscal Balance: Evidence from a Panel of Countries

Cited by 4 publications

References 0 publications

Sovereign Debt Composition in Advanced Economies: A Historical Perspective

Sovereign Debt Composition in Advanced Economies: A Historical Perspective

Creative accounting and electoral motives: Evidence from OECD countries

Public Debt Through the Ages

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