The Nexus between Public Debt and the Government Spending Multiplier: Fiscal Adjustments Matter*

Iwata, Yasuharu; Iiboshi, Hirokuni

doi:10.1111/obes.12547

Cited by 4 publications

(2 citation statements)

References 106 publications

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“…Reductions in government expenditures will lead to a dampening of debt dynamics across all fiscal policy regimes, such that expenditure cuts are more important for debt reductions than revenue increases. Iwata and Iiboshi (2023) argue that the increased magnitude of fiscal adjustments appears to be the major driving force behind the decline in government spending multipliers rather than debt accumulation itself. Of course, these public policies do not consider the effects on systemic resilience of nation to face crises.…”

Section: Scientific Explanation Of Resultsmentioning

confidence: 99%

Negative Effects of High Public Debt for Health Planning: Lessons From Covid-19 Pandemic Crisis in Europe

Coccia,

Benati

2023

Preprint

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The goal of this study is to analyze why some countries have had a high negative impact of COVID-19 pandemic crisis in terms of fatality rate compared to others. In particular, this study endeavors to verify whether statistical evidence supports the hypothesis that high general government gross debt in countries generates a structural vulnerability in socioeconomic and health systems to face emergencies, such as COVID-19 pandemic crisis. The research setting here analyzes the relationship between general government gross debt (as % GDP), healthcare expenditures per capita, and COVID-19 case fatality in an international context given by European countries. Empirical evidence reveals that European countries having lower COVID-19 fatality rate in 2020 (1.40%, indicated as group 1) had also lower government gross debt as % of GDP both in 2009 (50.79%) and 2019 (46.80%) than countries with higher fatality rate (2.83% given by group 2) that had 81.49% in 2009 and 67.22% in 2019. In addition, group 1 has from 2009 to 2019 a lower growth of government gross debt (% of GDP) given by 0.12 compared to group 2, which experienced a high growth of 0.29 generating a high burden for socioeconomic system and public finance. This structural situation leads countries of group 1 with lower COVID-19 fatality rates to support higher levels of health expenditure per capita (values higher than $3,100 per capita), whereas countries with a higher COVID-19 fatality rate have health expenditure per capita lower than previous group 1 (about $2,530 in 2009 and $2,600 in 2019) also for stringent austerity policies imposed by European Union. Estimated relationship shows that countries with 1% increase in the change of health expenditure per capita over 2009-2019 (predicted values considering in stage 1 the explanatory variable of government gross debt as % of GDP in 2009), it reduces the level of COVID-19 fatality rate by 2.63%. The contribution here expands the knowledge in these research topics by endeavoring to clarify primary causes of vulnerability of countries in crisis management driven by high levels of government gross debt, which deteriorate socioeconomic systems with stringent austerity policies that create constraints to increase health expenditures and improve health planning, reducing preparedness and resilience of countries to face crises similar to COVID-19 pandemic.

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Section: Scientific Explanation Of Resultsmentioning

confidence: 99%

Negative Effects of High Public Debt for Health Planning: Lessons From Covid-19 Pandemic Crisis in Europe

Coccia,

Benati

2023

Preprint

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“…Reductions in government expenditures can lead to a dampening of debt dynamics across all fiscal policy regimes, such that expenditure cuts are more important for debt reductions than revenue increases. Iwata and Iiboshi [68] argued that the increased magnitude of fiscal adjustments appears to be the major driving force behind the decline in government spending multipliers rather than debt accumulation itself. Of course, these public policies do not consider the effects of high public debt on the systemic resilience of a nation to face crises.…”

Section: Discussionmentioning

confidence: 99%

Negative effects of high public debt on health systems facing pandemic crisis: Lessons from COVID-19 in Europe to prepare for future emergencies

Coccia,

Benati

2024

AIMSPH

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<abstract> <p>The investigation goal here was to analyze how the level of public debt affects preparedness of health systems to face emergencies. In particular, this study examined the negative effects of high public debt on health systems of European countries in the presence of the COVID-19 pandemic crisis. Empirical evidence revealed that European countries with a lower level of government debt as a percentage of GDP both in 2009 and 2019 (the period before the arrival of the pandemic) had lower COVID-19 fatality rates compared to countries with higher levels of public debt. The explanation is that high levels of public debt in countries trigger budget constraints that limit their ability to allocate resources to healthcare systems (e.g., health expenditures and investments), weakening health system performance and causing systemic vulnerability and lower preparedness during emergencies, such as with the COVID-19 pandemic. Implications of health policies are suggested to improve strategies of crisis management.</p> </abstract>

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How High Public Debt Reduces the Preparedness of European Health Systems to Cope With Covid-19 Pandemic Crisis and Other Systemic Emergencies

Coccia,

Benati

2024

SSRN Journal

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The Nexus between Public Debt and the Government Spending Multiplier: Fiscal Adjustments Matter*

Cited by 4 publications

References 106 publications

Negative Effects of High Public Debt for Health Planning: Lessons From Covid-19 Pandemic Crisis in Europe

Negative Effects of High Public Debt for Health Planning: Lessons From Covid-19 Pandemic Crisis in Europe

Negative effects of high public debt on health systems facing pandemic crisis: Lessons from COVID-19 in Europe to prepare for future emergencies

How High Public Debt Reduces the Preparedness of European Health Systems to Cope With Covid-19 Pandemic Crisis and Other Systemic Emergencies

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