TY - JOUR
T1 - The composition of the government budget and the dynamics of public debt
AU - Köhler-Töglhofer, Walpurga
AU - Zagler, Martin
PY - 2007/6
Y1 - 2007/6
N2 - This paper investigates compositional effects on public-debt dynamics. Our contribution is twofold. First, we improve the methodology by taking explicit account of public-debt dynamics, eliminating a bias present in previous studies. Second, we estimate the evolution of debt dynamics induced by changes in the primary expenditure and revenue ratios - looking at all fiscal periods - not only consolidations as in the previous literature. Whilst we confirm that expenditure cuts are more important for debt reductions than are revenue increases, our findings contrast with the literature in that we obtain persistent debt-augmenting effects of tax reductions.
AB - This paper investigates compositional effects on public-debt dynamics. Our contribution is twofold. First, we improve the methodology by taking explicit account of public-debt dynamics, eliminating a bias present in previous studies. Second, we estimate the evolution of debt dynamics induced by changes in the primary expenditure and revenue ratios - looking at all fiscal periods - not only consolidations as in the previous literature. Whilst we confirm that expenditure cuts are more important for debt reductions than are revenue increases, our findings contrast with the literature in that we obtain persistent debt-augmenting effects of tax reductions.
KW - Excessive deficits
KW - Fiscal consolidations
KW - Fiscal expansions
KW - Public-debt dynamics
UR - http://www.scopus.com/inward/record.url?scp=34548034464&partnerID=8YFLogxK
U2 - 10.1628/001522107X220099
DO - 10.1628/001522107X220099
M3 - Article
SN - 0015-2218
VL - 63
SP - 244
EP - 263
JO - FinanzArchiv
JF - FinanzArchiv
IS - 2
ER -