A Framework to Assess Fiscal Vulnerability: Empirical Evidence for European Union Countries
| Autor: | Iulian Viorel Brașoveanu, Laura Obreja Brașoveanu, Andreea Stoian, Bogdan Andrei Dumitrescu |
|---|---|
| Jazyk: | angličtina |
| Rok vydání: | 2018 |
| Předmět: |
media_common.quotation_subject
lcsh:TJ807-830 Geography Planning and Development lcsh:Renewable energy sources Vulnerability 010501 environmental sciences Management Monitoring Policy and Law 01 natural sciences Debt 0502 economics and business Development economics Economics public debt media_common.cataloged_instance European Union 050207 economics European union Empirical evidence lcsh:Environmental sciences 0105 earth and related environmental sciences media_common lcsh:GE1-350 primary balance Renewable Energy Sustainability and the Environment lcsh:Environmental effects of industries and plants 05 social sciences fiscal sustainability Fiscal policy budgetary deficit lcsh:TD194-195 Financial crisis fiscal vulnerability Fiscal sustainability fiscal policy Public finance |
| Zdroj: | Sustainability Volume 10 Issue 7 Sustainability, Vol 10, Iss 7, p 2482 (2018) |
| ISSN: | 2071-1050 |
| DOI: | 10.3390/su10072482 |
| Popis: | Following the financial crisis of 2007 and the sovereign debt crisis in 2010 that affected the soundness and reduced the strength of public finance in European countries, there has been a growing interest in developing methodologies to the help assess and signal the vulnerability of fiscal policy. Therefore, the aim of this study is to develop a new framework (V-L-D) to assess fiscal vulnerability. V-L-D represents a new methodology on the measurement of fiscal vulnerability that relies on the assumption that vulnerability can occur even during calm times. In comparison with previous methodologies that studied fiscal vulnerability around crisis and fiscal distress times, our framework investigates fiscal vulnerability near fiscal adjustments episodes. Our methodology relies on two distinct indicators: one showing the vulnerabilities indicated by the level of the cyclically adjusted budget balance and distance-to-stability, and one showing the vulnerabilities pointed out through the changes of the cyclically adjusted budget balance and public debt. V-L-D is able to classify fiscal vulnerability into five distinct categories having scores from 0 (no fiscal vulnerability) to 4 (extreme fiscal vulnerability). Using annual data ranging over 1990&ndash 2013 for 28 European Union countries, we evidenced 310 episodes of fiscal vulnerability, out of which 128 episodes of low vulnerability, 94 of moderate, 62 of strong, and 26 of extreme fiscal vulnerability. We also found that over 2004&ndash 2013, Greece, Portugal, Romania, United Kingdom, Ireland, Spain, and Slovenia were the most fiscally vulnerable countries in the Union. United Kingdom and Greece went through the longest episodes of fiscal vulnerability, counting 12 and 11 consecutive years, respectively. We tested our framework&rsquo s effectiveness against the Excessive Deficit Procedure. We found that the overall performance is good: V-L-D assessed moderate fiscal vulnerability during the procedure, strong fiscal vulnerability in the first year when procedure was initiated, and extreme vulnerability one year before the initiation. |
| Databáze: | OpenAIRE |
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