greece macro focus, may 12, 2014 - fiscal multiplier, automatic stabiliz
TRANSCRIPT
1
2
Fiscal multipliers are defined as the ratio of a change in output to an exogenous change in the fiscal deficit with respect to their baselinesSee for instance Auerbach and Gorodnichenko (2011) Baum and Koester (2011) Batini et al (2012) and Blanchard and Leigh (2013)A recent literature review by Mineshima et al (2013) which updates earlier IMF estimates by Spilimbergo and others (2009) finds first-year
multipliers of about 08 for government spending and about 03 for revenue measures Since about two-thirds of recent fiscal adjustments in advanced economies rely on spending measures this implies an average overall impact multiplier of ca 06 (see Eyraud and Weber 2013)4 Monokroussos and Thomakos (2012) ldquoFiscal multipliers in deep economic recessions and the case for a 2-year extension in Greecersquos austerity programmerdquo Eurobank Global Markets Research Oct 2012
IMF Fiscal Monitor April 2014Delong and Summers (2012) argue that under certain conditions even a small amount of ldquohysteresisrdquo ndash even a small shadow cast on future potential
output by the cyclical downturn ndash means by simple arithmetic that expansionary fiscal policy is likely to be self-financingSee eg European Commission (2012) Eyraud and Weber (2013)
3
4
See eg European Commission (2012 2013)See eg Bussard et al (2012)
5
See Eyraud and Weber (2013)
6
European Commission (April 2014) and IMF (July 2013)
7
12 A more detailed analysis on this debt relief structure is provided in Greece Macro Monitor ldquoThe economic and market significance of the new 5-year government bond issue- Resumed market access and a new debt relief package will greatly lessen the need for additional official sector financingrdquo Eurobank Global Markets Research April 15 2014 httpwwweurobankgrUploadsReportsGREECE_MACRO_FOCUS_April15_2014_5Y_Bond_issuepdf
European Commission (April 2014) and IMF Fiscal Monitor (April 2014)
8
European Commission (April 2014)
9
10
11
See European Commission ldquoEffects of fiscal consolidation envisaged in the 2013 Stability and Convergence Programmes on public
debt dynamics in EU Member Statesrdquo Economic Papers 504Sept 2013
12
13
14
See European Commission ldquoEffects of fiscal consolidation envisaged in the 2013 Stability and Convergence Programmes on public debt dynamics
in EU Member Statesrdquo Economic Papers 504Sept 2013 European Commission (April 2014) IMF (July 2013) Eurobank Global Markets Research
15
16
17
18
19
―
―
―
―
―
20
o
o
o
o
o
o
o
o
21
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Gross public debt ( GDP) 1702 1572 1750 1771 1721 1622 1517 1421 1327 1243
Nominal public debt (EUR bn) 3548 3039 3187 3221 3233 3195 3132 3073 3006 2937
Memorandoum items
Real GDP Growth -72 -70 -39 06 29 37 35 32 30 26
GDP deflator inflation 12 -03 -21 -07 04 11 13 15 17 17
Primary fiscal balance ( GDP) -24 -13 08 16 30 45 45 43 43 42
Nominal interest rate on debt () 46 27 24 25 30 32 34 34 35 35
Nominal GDP (EURbn) 2085 1933 1821 1819 1879 1969 2064 2162 2265 2363
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Gross public debt ( GDP) 1179 1126 1079 1037 1001 962 926 892 858 824
Nominal public debt (EUR bn) 2897 2876 2863 2861 2868 2866 2868 2870 2872 2867
Memorandoum items
Real GDP Growth 20 19 19 19 19 19 19 19 19 19
GDP deflator inflation 19 20 20 20 20 20 20 20 20 20
Primary fiscal balance ( GDP) 40 40 40 40 40 40 40 40 40 40
Nominal interest rate on debt () 36 36 36 38 40 41 43 46 47 47
Nominal GDP (EURbn) 2457 2553 2654 2758 2867 2980 3097 3219 3346 3478
22
This decay function reproduces relatively well the shape of the impulse-response function by typical DSGE models for most of the permanents
fiscal shocks
23
24
2
Fiscal multipliers are defined as the ratio of a change in output to an exogenous change in the fiscal deficit with respect to their baselinesSee for instance Auerbach and Gorodnichenko (2011) Baum and Koester (2011) Batini et al (2012) and Blanchard and Leigh (2013)A recent literature review by Mineshima et al (2013) which updates earlier IMF estimates by Spilimbergo and others (2009) finds first-year
multipliers of about 08 for government spending and about 03 for revenue measures Since about two-thirds of recent fiscal adjustments in advanced economies rely on spending measures this implies an average overall impact multiplier of ca 06 (see Eyraud and Weber 2013)4 Monokroussos and Thomakos (2012) ldquoFiscal multipliers in deep economic recessions and the case for a 2-year extension in Greecersquos austerity programmerdquo Eurobank Global Markets Research Oct 2012
IMF Fiscal Monitor April 2014Delong and Summers (2012) argue that under certain conditions even a small amount of ldquohysteresisrdquo ndash even a small shadow cast on future potential
output by the cyclical downturn ndash means by simple arithmetic that expansionary fiscal policy is likely to be self-financingSee eg European Commission (2012) Eyraud and Weber (2013)
3
4
See eg European Commission (2012 2013)See eg Bussard et al (2012)
5
See Eyraud and Weber (2013)
6
European Commission (April 2014) and IMF (July 2013)
7
12 A more detailed analysis on this debt relief structure is provided in Greece Macro Monitor ldquoThe economic and market significance of the new 5-year government bond issue- Resumed market access and a new debt relief package will greatly lessen the need for additional official sector financingrdquo Eurobank Global Markets Research April 15 2014 httpwwweurobankgrUploadsReportsGREECE_MACRO_FOCUS_April15_2014_5Y_Bond_issuepdf
European Commission (April 2014) and IMF Fiscal Monitor (April 2014)
8
European Commission (April 2014)
9
10
11
See European Commission ldquoEffects of fiscal consolidation envisaged in the 2013 Stability and Convergence Programmes on public
debt dynamics in EU Member Statesrdquo Economic Papers 504Sept 2013
12
13
14
See European Commission ldquoEffects of fiscal consolidation envisaged in the 2013 Stability and Convergence Programmes on public debt dynamics
in EU Member Statesrdquo Economic Papers 504Sept 2013 European Commission (April 2014) IMF (July 2013) Eurobank Global Markets Research
15
16
17
18
19
―
―
―
―
―
20
o
o
o
o
o
o
o
o
21
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Gross public debt ( GDP) 1702 1572 1750 1771 1721 1622 1517 1421 1327 1243
Nominal public debt (EUR bn) 3548 3039 3187 3221 3233 3195 3132 3073 3006 2937
Memorandoum items
Real GDP Growth -72 -70 -39 06 29 37 35 32 30 26
GDP deflator inflation 12 -03 -21 -07 04 11 13 15 17 17
Primary fiscal balance ( GDP) -24 -13 08 16 30 45 45 43 43 42
Nominal interest rate on debt () 46 27 24 25 30 32 34 34 35 35
Nominal GDP (EURbn) 2085 1933 1821 1819 1879 1969 2064 2162 2265 2363
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Gross public debt ( GDP) 1179 1126 1079 1037 1001 962 926 892 858 824
Nominal public debt (EUR bn) 2897 2876 2863 2861 2868 2866 2868 2870 2872 2867
Memorandoum items
Real GDP Growth 20 19 19 19 19 19 19 19 19 19
GDP deflator inflation 19 20 20 20 20 20 20 20 20 20
Primary fiscal balance ( GDP) 40 40 40 40 40 40 40 40 40 40
Nominal interest rate on debt () 36 36 36 38 40 41 43 46 47 47
Nominal GDP (EURbn) 2457 2553 2654 2758 2867 2980 3097 3219 3346 3478
22
This decay function reproduces relatively well the shape of the impulse-response function by typical DSGE models for most of the permanents
fiscal shocks
23
24
3
4
See eg European Commission (2012 2013)See eg Bussard et al (2012)
5
See Eyraud and Weber (2013)
6
European Commission (April 2014) and IMF (July 2013)
7
12 A more detailed analysis on this debt relief structure is provided in Greece Macro Monitor ldquoThe economic and market significance of the new 5-year government bond issue- Resumed market access and a new debt relief package will greatly lessen the need for additional official sector financingrdquo Eurobank Global Markets Research April 15 2014 httpwwweurobankgrUploadsReportsGREECE_MACRO_FOCUS_April15_2014_5Y_Bond_issuepdf
European Commission (April 2014) and IMF Fiscal Monitor (April 2014)
8
European Commission (April 2014)
9
10
11
See European Commission ldquoEffects of fiscal consolidation envisaged in the 2013 Stability and Convergence Programmes on public
debt dynamics in EU Member Statesrdquo Economic Papers 504Sept 2013
12
13
14
See European Commission ldquoEffects of fiscal consolidation envisaged in the 2013 Stability and Convergence Programmes on public debt dynamics
in EU Member Statesrdquo Economic Papers 504Sept 2013 European Commission (April 2014) IMF (July 2013) Eurobank Global Markets Research
15
16
17
18
19
―
―
―
―
―
20
o
o
o
o
o
o
o
o
21
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Gross public debt ( GDP) 1702 1572 1750 1771 1721 1622 1517 1421 1327 1243
Nominal public debt (EUR bn) 3548 3039 3187 3221 3233 3195 3132 3073 3006 2937
Memorandoum items
Real GDP Growth -72 -70 -39 06 29 37 35 32 30 26
GDP deflator inflation 12 -03 -21 -07 04 11 13 15 17 17
Primary fiscal balance ( GDP) -24 -13 08 16 30 45 45 43 43 42
Nominal interest rate on debt () 46 27 24 25 30 32 34 34 35 35
Nominal GDP (EURbn) 2085 1933 1821 1819 1879 1969 2064 2162 2265 2363
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Gross public debt ( GDP) 1179 1126 1079 1037 1001 962 926 892 858 824
Nominal public debt (EUR bn) 2897 2876 2863 2861 2868 2866 2868 2870 2872 2867
Memorandoum items
Real GDP Growth 20 19 19 19 19 19 19 19 19 19
GDP deflator inflation 19 20 20 20 20 20 20 20 20 20
Primary fiscal balance ( GDP) 40 40 40 40 40 40 40 40 40 40
Nominal interest rate on debt () 36 36 36 38 40 41 43 46 47 47
Nominal GDP (EURbn) 2457 2553 2654 2758 2867 2980 3097 3219 3346 3478
22
This decay function reproduces relatively well the shape of the impulse-response function by typical DSGE models for most of the permanents
fiscal shocks
23
24
4
See eg European Commission (2012 2013)See eg Bussard et al (2012)
5
See Eyraud and Weber (2013)
6
European Commission (April 2014) and IMF (July 2013)
7
12 A more detailed analysis on this debt relief structure is provided in Greece Macro Monitor ldquoThe economic and market significance of the new 5-year government bond issue- Resumed market access and a new debt relief package will greatly lessen the need for additional official sector financingrdquo Eurobank Global Markets Research April 15 2014 httpwwweurobankgrUploadsReportsGREECE_MACRO_FOCUS_April15_2014_5Y_Bond_issuepdf
European Commission (April 2014) and IMF Fiscal Monitor (April 2014)
8
European Commission (April 2014)
9
10
11
See European Commission ldquoEffects of fiscal consolidation envisaged in the 2013 Stability and Convergence Programmes on public
debt dynamics in EU Member Statesrdquo Economic Papers 504Sept 2013
12
13
14
See European Commission ldquoEffects of fiscal consolidation envisaged in the 2013 Stability and Convergence Programmes on public debt dynamics
in EU Member Statesrdquo Economic Papers 504Sept 2013 European Commission (April 2014) IMF (July 2013) Eurobank Global Markets Research
15
16
17
18
19
―
―
―
―
―
20
o
o
o
o
o
o
o
o
21
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Gross public debt ( GDP) 1702 1572 1750 1771 1721 1622 1517 1421 1327 1243
Nominal public debt (EUR bn) 3548 3039 3187 3221 3233 3195 3132 3073 3006 2937
Memorandoum items
Real GDP Growth -72 -70 -39 06 29 37 35 32 30 26
GDP deflator inflation 12 -03 -21 -07 04 11 13 15 17 17
Primary fiscal balance ( GDP) -24 -13 08 16 30 45 45 43 43 42
Nominal interest rate on debt () 46 27 24 25 30 32 34 34 35 35
Nominal GDP (EURbn) 2085 1933 1821 1819 1879 1969 2064 2162 2265 2363
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Gross public debt ( GDP) 1179 1126 1079 1037 1001 962 926 892 858 824
Nominal public debt (EUR bn) 2897 2876 2863 2861 2868 2866 2868 2870 2872 2867
Memorandoum items
Real GDP Growth 20 19 19 19 19 19 19 19 19 19
GDP deflator inflation 19 20 20 20 20 20 20 20 20 20
Primary fiscal balance ( GDP) 40 40 40 40 40 40 40 40 40 40
Nominal interest rate on debt () 36 36 36 38 40 41 43 46 47 47
Nominal GDP (EURbn) 2457 2553 2654 2758 2867 2980 3097 3219 3346 3478
22
This decay function reproduces relatively well the shape of the impulse-response function by typical DSGE models for most of the permanents
fiscal shocks
23
24
5
See Eyraud and Weber (2013)
6
European Commission (April 2014) and IMF (July 2013)
7
12 A more detailed analysis on this debt relief structure is provided in Greece Macro Monitor ldquoThe economic and market significance of the new 5-year government bond issue- Resumed market access and a new debt relief package will greatly lessen the need for additional official sector financingrdquo Eurobank Global Markets Research April 15 2014 httpwwweurobankgrUploadsReportsGREECE_MACRO_FOCUS_April15_2014_5Y_Bond_issuepdf
European Commission (April 2014) and IMF Fiscal Monitor (April 2014)
8
European Commission (April 2014)
9
10
11
See European Commission ldquoEffects of fiscal consolidation envisaged in the 2013 Stability and Convergence Programmes on public
debt dynamics in EU Member Statesrdquo Economic Papers 504Sept 2013
12
13
14
See European Commission ldquoEffects of fiscal consolidation envisaged in the 2013 Stability and Convergence Programmes on public debt dynamics
in EU Member Statesrdquo Economic Papers 504Sept 2013 European Commission (April 2014) IMF (July 2013) Eurobank Global Markets Research
15
16
17
18
19
―
―
―
―
―
20
o
o
o
o
o
o
o
o
21
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Gross public debt ( GDP) 1702 1572 1750 1771 1721 1622 1517 1421 1327 1243
Nominal public debt (EUR bn) 3548 3039 3187 3221 3233 3195 3132 3073 3006 2937
Memorandoum items
Real GDP Growth -72 -70 -39 06 29 37 35 32 30 26
GDP deflator inflation 12 -03 -21 -07 04 11 13 15 17 17
Primary fiscal balance ( GDP) -24 -13 08 16 30 45 45 43 43 42
Nominal interest rate on debt () 46 27 24 25 30 32 34 34 35 35
Nominal GDP (EURbn) 2085 1933 1821 1819 1879 1969 2064 2162 2265 2363
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Gross public debt ( GDP) 1179 1126 1079 1037 1001 962 926 892 858 824
Nominal public debt (EUR bn) 2897 2876 2863 2861 2868 2866 2868 2870 2872 2867
Memorandoum items
Real GDP Growth 20 19 19 19 19 19 19 19 19 19
GDP deflator inflation 19 20 20 20 20 20 20 20 20 20
Primary fiscal balance ( GDP) 40 40 40 40 40 40 40 40 40 40
Nominal interest rate on debt () 36 36 36 38 40 41 43 46 47 47
Nominal GDP (EURbn) 2457 2553 2654 2758 2867 2980 3097 3219 3346 3478
22
This decay function reproduces relatively well the shape of the impulse-response function by typical DSGE models for most of the permanents
fiscal shocks
23
24
6
European Commission (April 2014) and IMF (July 2013)
7
12 A more detailed analysis on this debt relief structure is provided in Greece Macro Monitor ldquoThe economic and market significance of the new 5-year government bond issue- Resumed market access and a new debt relief package will greatly lessen the need for additional official sector financingrdquo Eurobank Global Markets Research April 15 2014 httpwwweurobankgrUploadsReportsGREECE_MACRO_FOCUS_April15_2014_5Y_Bond_issuepdf
European Commission (April 2014) and IMF Fiscal Monitor (April 2014)
8
European Commission (April 2014)
9
10
11
See European Commission ldquoEffects of fiscal consolidation envisaged in the 2013 Stability and Convergence Programmes on public
debt dynamics in EU Member Statesrdquo Economic Papers 504Sept 2013
12
13
14
See European Commission ldquoEffects of fiscal consolidation envisaged in the 2013 Stability and Convergence Programmes on public debt dynamics
in EU Member Statesrdquo Economic Papers 504Sept 2013 European Commission (April 2014) IMF (July 2013) Eurobank Global Markets Research
15
16
17
18
19
―
―
―
―
―
20
o
o
o
o
o
o
o
o
21
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Gross public debt ( GDP) 1702 1572 1750 1771 1721 1622 1517 1421 1327 1243
Nominal public debt (EUR bn) 3548 3039 3187 3221 3233 3195 3132 3073 3006 2937
Memorandoum items
Real GDP Growth -72 -70 -39 06 29 37 35 32 30 26
GDP deflator inflation 12 -03 -21 -07 04 11 13 15 17 17
Primary fiscal balance ( GDP) -24 -13 08 16 30 45 45 43 43 42
Nominal interest rate on debt () 46 27 24 25 30 32 34 34 35 35
Nominal GDP (EURbn) 2085 1933 1821 1819 1879 1969 2064 2162 2265 2363
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Gross public debt ( GDP) 1179 1126 1079 1037 1001 962 926 892 858 824
Nominal public debt (EUR bn) 2897 2876 2863 2861 2868 2866 2868 2870 2872 2867
Memorandoum items
Real GDP Growth 20 19 19 19 19 19 19 19 19 19
GDP deflator inflation 19 20 20 20 20 20 20 20 20 20
Primary fiscal balance ( GDP) 40 40 40 40 40 40 40 40 40 40
Nominal interest rate on debt () 36 36 36 38 40 41 43 46 47 47
Nominal GDP (EURbn) 2457 2553 2654 2758 2867 2980 3097 3219 3346 3478
22
This decay function reproduces relatively well the shape of the impulse-response function by typical DSGE models for most of the permanents
fiscal shocks
23
24
7
12 A more detailed analysis on this debt relief structure is provided in Greece Macro Monitor ldquoThe economic and market significance of the new 5-year government bond issue- Resumed market access and a new debt relief package will greatly lessen the need for additional official sector financingrdquo Eurobank Global Markets Research April 15 2014 httpwwweurobankgrUploadsReportsGREECE_MACRO_FOCUS_April15_2014_5Y_Bond_issuepdf
European Commission (April 2014) and IMF Fiscal Monitor (April 2014)
8
European Commission (April 2014)
9
10
11
See European Commission ldquoEffects of fiscal consolidation envisaged in the 2013 Stability and Convergence Programmes on public
debt dynamics in EU Member Statesrdquo Economic Papers 504Sept 2013
12
13
14
See European Commission ldquoEffects of fiscal consolidation envisaged in the 2013 Stability and Convergence Programmes on public debt dynamics
in EU Member Statesrdquo Economic Papers 504Sept 2013 European Commission (April 2014) IMF (July 2013) Eurobank Global Markets Research
15
16
17
18
19
―
―
―
―
―
20
o
o
o
o
o
o
o
o
21
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Gross public debt ( GDP) 1702 1572 1750 1771 1721 1622 1517 1421 1327 1243
Nominal public debt (EUR bn) 3548 3039 3187 3221 3233 3195 3132 3073 3006 2937
Memorandoum items
Real GDP Growth -72 -70 -39 06 29 37 35 32 30 26
GDP deflator inflation 12 -03 -21 -07 04 11 13 15 17 17
Primary fiscal balance ( GDP) -24 -13 08 16 30 45 45 43 43 42
Nominal interest rate on debt () 46 27 24 25 30 32 34 34 35 35
Nominal GDP (EURbn) 2085 1933 1821 1819 1879 1969 2064 2162 2265 2363
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Gross public debt ( GDP) 1179 1126 1079 1037 1001 962 926 892 858 824
Nominal public debt (EUR bn) 2897 2876 2863 2861 2868 2866 2868 2870 2872 2867
Memorandoum items
Real GDP Growth 20 19 19 19 19 19 19 19 19 19
GDP deflator inflation 19 20 20 20 20 20 20 20 20 20
Primary fiscal balance ( GDP) 40 40 40 40 40 40 40 40 40 40
Nominal interest rate on debt () 36 36 36 38 40 41 43 46 47 47
Nominal GDP (EURbn) 2457 2553 2654 2758 2867 2980 3097 3219 3346 3478
22
This decay function reproduces relatively well the shape of the impulse-response function by typical DSGE models for most of the permanents
fiscal shocks
23
24
8
European Commission (April 2014)
9
10
11
See European Commission ldquoEffects of fiscal consolidation envisaged in the 2013 Stability and Convergence Programmes on public
debt dynamics in EU Member Statesrdquo Economic Papers 504Sept 2013
12
13
14
See European Commission ldquoEffects of fiscal consolidation envisaged in the 2013 Stability and Convergence Programmes on public debt dynamics
in EU Member Statesrdquo Economic Papers 504Sept 2013 European Commission (April 2014) IMF (July 2013) Eurobank Global Markets Research
15
16
17
18
19
―
―
―
―
―
20
o
o
o
o
o
o
o
o
21
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Gross public debt ( GDP) 1702 1572 1750 1771 1721 1622 1517 1421 1327 1243
Nominal public debt (EUR bn) 3548 3039 3187 3221 3233 3195 3132 3073 3006 2937
Memorandoum items
Real GDP Growth -72 -70 -39 06 29 37 35 32 30 26
GDP deflator inflation 12 -03 -21 -07 04 11 13 15 17 17
Primary fiscal balance ( GDP) -24 -13 08 16 30 45 45 43 43 42
Nominal interest rate on debt () 46 27 24 25 30 32 34 34 35 35
Nominal GDP (EURbn) 2085 1933 1821 1819 1879 1969 2064 2162 2265 2363
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Gross public debt ( GDP) 1179 1126 1079 1037 1001 962 926 892 858 824
Nominal public debt (EUR bn) 2897 2876 2863 2861 2868 2866 2868 2870 2872 2867
Memorandoum items
Real GDP Growth 20 19 19 19 19 19 19 19 19 19
GDP deflator inflation 19 20 20 20 20 20 20 20 20 20
Primary fiscal balance ( GDP) 40 40 40 40 40 40 40 40 40 40
Nominal interest rate on debt () 36 36 36 38 40 41 43 46 47 47
Nominal GDP (EURbn) 2457 2553 2654 2758 2867 2980 3097 3219 3346 3478
22
This decay function reproduces relatively well the shape of the impulse-response function by typical DSGE models for most of the permanents
fiscal shocks
23
24
9
10
11
See European Commission ldquoEffects of fiscal consolidation envisaged in the 2013 Stability and Convergence Programmes on public
debt dynamics in EU Member Statesrdquo Economic Papers 504Sept 2013
12
13
14
See European Commission ldquoEffects of fiscal consolidation envisaged in the 2013 Stability and Convergence Programmes on public debt dynamics
in EU Member Statesrdquo Economic Papers 504Sept 2013 European Commission (April 2014) IMF (July 2013) Eurobank Global Markets Research
15
16
17
18
19
―
―
―
―
―
20
o
o
o
o
o
o
o
o
21
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Gross public debt ( GDP) 1702 1572 1750 1771 1721 1622 1517 1421 1327 1243
Nominal public debt (EUR bn) 3548 3039 3187 3221 3233 3195 3132 3073 3006 2937
Memorandoum items
Real GDP Growth -72 -70 -39 06 29 37 35 32 30 26
GDP deflator inflation 12 -03 -21 -07 04 11 13 15 17 17
Primary fiscal balance ( GDP) -24 -13 08 16 30 45 45 43 43 42
Nominal interest rate on debt () 46 27 24 25 30 32 34 34 35 35
Nominal GDP (EURbn) 2085 1933 1821 1819 1879 1969 2064 2162 2265 2363
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Gross public debt ( GDP) 1179 1126 1079 1037 1001 962 926 892 858 824
Nominal public debt (EUR bn) 2897 2876 2863 2861 2868 2866 2868 2870 2872 2867
Memorandoum items
Real GDP Growth 20 19 19 19 19 19 19 19 19 19
GDP deflator inflation 19 20 20 20 20 20 20 20 20 20
Primary fiscal balance ( GDP) 40 40 40 40 40 40 40 40 40 40
Nominal interest rate on debt () 36 36 36 38 40 41 43 46 47 47
Nominal GDP (EURbn) 2457 2553 2654 2758 2867 2980 3097 3219 3346 3478
22
This decay function reproduces relatively well the shape of the impulse-response function by typical DSGE models for most of the permanents
fiscal shocks
23
24
10
11
See European Commission ldquoEffects of fiscal consolidation envisaged in the 2013 Stability and Convergence Programmes on public
debt dynamics in EU Member Statesrdquo Economic Papers 504Sept 2013
12
13
14
See European Commission ldquoEffects of fiscal consolidation envisaged in the 2013 Stability and Convergence Programmes on public debt dynamics
in EU Member Statesrdquo Economic Papers 504Sept 2013 European Commission (April 2014) IMF (July 2013) Eurobank Global Markets Research
15
16
17
18
19
―
―
―
―
―
20
o
o
o
o
o
o
o
o
21
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Gross public debt ( GDP) 1702 1572 1750 1771 1721 1622 1517 1421 1327 1243
Nominal public debt (EUR bn) 3548 3039 3187 3221 3233 3195 3132 3073 3006 2937
Memorandoum items
Real GDP Growth -72 -70 -39 06 29 37 35 32 30 26
GDP deflator inflation 12 -03 -21 -07 04 11 13 15 17 17
Primary fiscal balance ( GDP) -24 -13 08 16 30 45 45 43 43 42
Nominal interest rate on debt () 46 27 24 25 30 32 34 34 35 35
Nominal GDP (EURbn) 2085 1933 1821 1819 1879 1969 2064 2162 2265 2363
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Gross public debt ( GDP) 1179 1126 1079 1037 1001 962 926 892 858 824
Nominal public debt (EUR bn) 2897 2876 2863 2861 2868 2866 2868 2870 2872 2867
Memorandoum items
Real GDP Growth 20 19 19 19 19 19 19 19 19 19
GDP deflator inflation 19 20 20 20 20 20 20 20 20 20
Primary fiscal balance ( GDP) 40 40 40 40 40 40 40 40 40 40
Nominal interest rate on debt () 36 36 36 38 40 41 43 46 47 47
Nominal GDP (EURbn) 2457 2553 2654 2758 2867 2980 3097 3219 3346 3478
22
This decay function reproduces relatively well the shape of the impulse-response function by typical DSGE models for most of the permanents
fiscal shocks
23
24
11
See European Commission ldquoEffects of fiscal consolidation envisaged in the 2013 Stability and Convergence Programmes on public
debt dynamics in EU Member Statesrdquo Economic Papers 504Sept 2013
12
13
14
See European Commission ldquoEffects of fiscal consolidation envisaged in the 2013 Stability and Convergence Programmes on public debt dynamics
in EU Member Statesrdquo Economic Papers 504Sept 2013 European Commission (April 2014) IMF (July 2013) Eurobank Global Markets Research
15
16
17
18
19
―
―
―
―
―
20
o
o
o
o
o
o
o
o
21
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Gross public debt ( GDP) 1702 1572 1750 1771 1721 1622 1517 1421 1327 1243
Nominal public debt (EUR bn) 3548 3039 3187 3221 3233 3195 3132 3073 3006 2937
Memorandoum items
Real GDP Growth -72 -70 -39 06 29 37 35 32 30 26
GDP deflator inflation 12 -03 -21 -07 04 11 13 15 17 17
Primary fiscal balance ( GDP) -24 -13 08 16 30 45 45 43 43 42
Nominal interest rate on debt () 46 27 24 25 30 32 34 34 35 35
Nominal GDP (EURbn) 2085 1933 1821 1819 1879 1969 2064 2162 2265 2363
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Gross public debt ( GDP) 1179 1126 1079 1037 1001 962 926 892 858 824
Nominal public debt (EUR bn) 2897 2876 2863 2861 2868 2866 2868 2870 2872 2867
Memorandoum items
Real GDP Growth 20 19 19 19 19 19 19 19 19 19
GDP deflator inflation 19 20 20 20 20 20 20 20 20 20
Primary fiscal balance ( GDP) 40 40 40 40 40 40 40 40 40 40
Nominal interest rate on debt () 36 36 36 38 40 41 43 46 47 47
Nominal GDP (EURbn) 2457 2553 2654 2758 2867 2980 3097 3219 3346 3478
22
This decay function reproduces relatively well the shape of the impulse-response function by typical DSGE models for most of the permanents
fiscal shocks
23
24
12
13
14
See European Commission ldquoEffects of fiscal consolidation envisaged in the 2013 Stability and Convergence Programmes on public debt dynamics
in EU Member Statesrdquo Economic Papers 504Sept 2013 European Commission (April 2014) IMF (July 2013) Eurobank Global Markets Research
15
16
17
18
19
―
―
―
―
―
20
o
o
o
o
o
o
o
o
21
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Gross public debt ( GDP) 1702 1572 1750 1771 1721 1622 1517 1421 1327 1243
Nominal public debt (EUR bn) 3548 3039 3187 3221 3233 3195 3132 3073 3006 2937
Memorandoum items
Real GDP Growth -72 -70 -39 06 29 37 35 32 30 26
GDP deflator inflation 12 -03 -21 -07 04 11 13 15 17 17
Primary fiscal balance ( GDP) -24 -13 08 16 30 45 45 43 43 42
Nominal interest rate on debt () 46 27 24 25 30 32 34 34 35 35
Nominal GDP (EURbn) 2085 1933 1821 1819 1879 1969 2064 2162 2265 2363
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Gross public debt ( GDP) 1179 1126 1079 1037 1001 962 926 892 858 824
Nominal public debt (EUR bn) 2897 2876 2863 2861 2868 2866 2868 2870 2872 2867
Memorandoum items
Real GDP Growth 20 19 19 19 19 19 19 19 19 19
GDP deflator inflation 19 20 20 20 20 20 20 20 20 20
Primary fiscal balance ( GDP) 40 40 40 40 40 40 40 40 40 40
Nominal interest rate on debt () 36 36 36 38 40 41 43 46 47 47
Nominal GDP (EURbn) 2457 2553 2654 2758 2867 2980 3097 3219 3346 3478
22
This decay function reproduces relatively well the shape of the impulse-response function by typical DSGE models for most of the permanents
fiscal shocks
23
24
13
14
See European Commission ldquoEffects of fiscal consolidation envisaged in the 2013 Stability and Convergence Programmes on public debt dynamics
in EU Member Statesrdquo Economic Papers 504Sept 2013 European Commission (April 2014) IMF (July 2013) Eurobank Global Markets Research
15
16
17
18
19
―
―
―
―
―
20
o
o
o
o
o
o
o
o
21
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Gross public debt ( GDP) 1702 1572 1750 1771 1721 1622 1517 1421 1327 1243
Nominal public debt (EUR bn) 3548 3039 3187 3221 3233 3195 3132 3073 3006 2937
Memorandoum items
Real GDP Growth -72 -70 -39 06 29 37 35 32 30 26
GDP deflator inflation 12 -03 -21 -07 04 11 13 15 17 17
Primary fiscal balance ( GDP) -24 -13 08 16 30 45 45 43 43 42
Nominal interest rate on debt () 46 27 24 25 30 32 34 34 35 35
Nominal GDP (EURbn) 2085 1933 1821 1819 1879 1969 2064 2162 2265 2363
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Gross public debt ( GDP) 1179 1126 1079 1037 1001 962 926 892 858 824
Nominal public debt (EUR bn) 2897 2876 2863 2861 2868 2866 2868 2870 2872 2867
Memorandoum items
Real GDP Growth 20 19 19 19 19 19 19 19 19 19
GDP deflator inflation 19 20 20 20 20 20 20 20 20 20
Primary fiscal balance ( GDP) 40 40 40 40 40 40 40 40 40 40
Nominal interest rate on debt () 36 36 36 38 40 41 43 46 47 47
Nominal GDP (EURbn) 2457 2553 2654 2758 2867 2980 3097 3219 3346 3478
22
This decay function reproduces relatively well the shape of the impulse-response function by typical DSGE models for most of the permanents
fiscal shocks
23
24
14
See European Commission ldquoEffects of fiscal consolidation envisaged in the 2013 Stability and Convergence Programmes on public debt dynamics
in EU Member Statesrdquo Economic Papers 504Sept 2013 European Commission (April 2014) IMF (July 2013) Eurobank Global Markets Research
15
16
17
18
19
―
―
―
―
―
20
o
o
o
o
o
o
o
o
21
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Gross public debt ( GDP) 1702 1572 1750 1771 1721 1622 1517 1421 1327 1243
Nominal public debt (EUR bn) 3548 3039 3187 3221 3233 3195 3132 3073 3006 2937
Memorandoum items
Real GDP Growth -72 -70 -39 06 29 37 35 32 30 26
GDP deflator inflation 12 -03 -21 -07 04 11 13 15 17 17
Primary fiscal balance ( GDP) -24 -13 08 16 30 45 45 43 43 42
Nominal interest rate on debt () 46 27 24 25 30 32 34 34 35 35
Nominal GDP (EURbn) 2085 1933 1821 1819 1879 1969 2064 2162 2265 2363
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Gross public debt ( GDP) 1179 1126 1079 1037 1001 962 926 892 858 824
Nominal public debt (EUR bn) 2897 2876 2863 2861 2868 2866 2868 2870 2872 2867
Memorandoum items
Real GDP Growth 20 19 19 19 19 19 19 19 19 19
GDP deflator inflation 19 20 20 20 20 20 20 20 20 20
Primary fiscal balance ( GDP) 40 40 40 40 40 40 40 40 40 40
Nominal interest rate on debt () 36 36 36 38 40 41 43 46 47 47
Nominal GDP (EURbn) 2457 2553 2654 2758 2867 2980 3097 3219 3346 3478
22
This decay function reproduces relatively well the shape of the impulse-response function by typical DSGE models for most of the permanents
fiscal shocks
23
24
15
16
17
18
19
―
―
―
―
―
20
o
o
o
o
o
o
o
o
21
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Gross public debt ( GDP) 1702 1572 1750 1771 1721 1622 1517 1421 1327 1243
Nominal public debt (EUR bn) 3548 3039 3187 3221 3233 3195 3132 3073 3006 2937
Memorandoum items
Real GDP Growth -72 -70 -39 06 29 37 35 32 30 26
GDP deflator inflation 12 -03 -21 -07 04 11 13 15 17 17
Primary fiscal balance ( GDP) -24 -13 08 16 30 45 45 43 43 42
Nominal interest rate on debt () 46 27 24 25 30 32 34 34 35 35
Nominal GDP (EURbn) 2085 1933 1821 1819 1879 1969 2064 2162 2265 2363
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Gross public debt ( GDP) 1179 1126 1079 1037 1001 962 926 892 858 824
Nominal public debt (EUR bn) 2897 2876 2863 2861 2868 2866 2868 2870 2872 2867
Memorandoum items
Real GDP Growth 20 19 19 19 19 19 19 19 19 19
GDP deflator inflation 19 20 20 20 20 20 20 20 20 20
Primary fiscal balance ( GDP) 40 40 40 40 40 40 40 40 40 40
Nominal interest rate on debt () 36 36 36 38 40 41 43 46 47 47
Nominal GDP (EURbn) 2457 2553 2654 2758 2867 2980 3097 3219 3346 3478
22
This decay function reproduces relatively well the shape of the impulse-response function by typical DSGE models for most of the permanents
fiscal shocks
23
24
16
17
18
19
―
―
―
―
―
20
o
o
o
o
o
o
o
o
21
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Gross public debt ( GDP) 1702 1572 1750 1771 1721 1622 1517 1421 1327 1243
Nominal public debt (EUR bn) 3548 3039 3187 3221 3233 3195 3132 3073 3006 2937
Memorandoum items
Real GDP Growth -72 -70 -39 06 29 37 35 32 30 26
GDP deflator inflation 12 -03 -21 -07 04 11 13 15 17 17
Primary fiscal balance ( GDP) -24 -13 08 16 30 45 45 43 43 42
Nominal interest rate on debt () 46 27 24 25 30 32 34 34 35 35
Nominal GDP (EURbn) 2085 1933 1821 1819 1879 1969 2064 2162 2265 2363
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Gross public debt ( GDP) 1179 1126 1079 1037 1001 962 926 892 858 824
Nominal public debt (EUR bn) 2897 2876 2863 2861 2868 2866 2868 2870 2872 2867
Memorandoum items
Real GDP Growth 20 19 19 19 19 19 19 19 19 19
GDP deflator inflation 19 20 20 20 20 20 20 20 20 20
Primary fiscal balance ( GDP) 40 40 40 40 40 40 40 40 40 40
Nominal interest rate on debt () 36 36 36 38 40 41 43 46 47 47
Nominal GDP (EURbn) 2457 2553 2654 2758 2867 2980 3097 3219 3346 3478
22
This decay function reproduces relatively well the shape of the impulse-response function by typical DSGE models for most of the permanents
fiscal shocks
23
24
17
18
19
―
―
―
―
―
20
o
o
o
o
o
o
o
o
21
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Gross public debt ( GDP) 1702 1572 1750 1771 1721 1622 1517 1421 1327 1243
Nominal public debt (EUR bn) 3548 3039 3187 3221 3233 3195 3132 3073 3006 2937
Memorandoum items
Real GDP Growth -72 -70 -39 06 29 37 35 32 30 26
GDP deflator inflation 12 -03 -21 -07 04 11 13 15 17 17
Primary fiscal balance ( GDP) -24 -13 08 16 30 45 45 43 43 42
Nominal interest rate on debt () 46 27 24 25 30 32 34 34 35 35
Nominal GDP (EURbn) 2085 1933 1821 1819 1879 1969 2064 2162 2265 2363
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Gross public debt ( GDP) 1179 1126 1079 1037 1001 962 926 892 858 824
Nominal public debt (EUR bn) 2897 2876 2863 2861 2868 2866 2868 2870 2872 2867
Memorandoum items
Real GDP Growth 20 19 19 19 19 19 19 19 19 19
GDP deflator inflation 19 20 20 20 20 20 20 20 20 20
Primary fiscal balance ( GDP) 40 40 40 40 40 40 40 40 40 40
Nominal interest rate on debt () 36 36 36 38 40 41 43 46 47 47
Nominal GDP (EURbn) 2457 2553 2654 2758 2867 2980 3097 3219 3346 3478
22
This decay function reproduces relatively well the shape of the impulse-response function by typical DSGE models for most of the permanents
fiscal shocks
23
24
18
19
―
―
―
―
―
20
o
o
o
o
o
o
o
o
21
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Gross public debt ( GDP) 1702 1572 1750 1771 1721 1622 1517 1421 1327 1243
Nominal public debt (EUR bn) 3548 3039 3187 3221 3233 3195 3132 3073 3006 2937
Memorandoum items
Real GDP Growth -72 -70 -39 06 29 37 35 32 30 26
GDP deflator inflation 12 -03 -21 -07 04 11 13 15 17 17
Primary fiscal balance ( GDP) -24 -13 08 16 30 45 45 43 43 42
Nominal interest rate on debt () 46 27 24 25 30 32 34 34 35 35
Nominal GDP (EURbn) 2085 1933 1821 1819 1879 1969 2064 2162 2265 2363
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Gross public debt ( GDP) 1179 1126 1079 1037 1001 962 926 892 858 824
Nominal public debt (EUR bn) 2897 2876 2863 2861 2868 2866 2868 2870 2872 2867
Memorandoum items
Real GDP Growth 20 19 19 19 19 19 19 19 19 19
GDP deflator inflation 19 20 20 20 20 20 20 20 20 20
Primary fiscal balance ( GDP) 40 40 40 40 40 40 40 40 40 40
Nominal interest rate on debt () 36 36 36 38 40 41 43 46 47 47
Nominal GDP (EURbn) 2457 2553 2654 2758 2867 2980 3097 3219 3346 3478
22
This decay function reproduces relatively well the shape of the impulse-response function by typical DSGE models for most of the permanents
fiscal shocks
23
24
19
―
―
―
―
―
20
o
o
o
o
o
o
o
o
21
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Gross public debt ( GDP) 1702 1572 1750 1771 1721 1622 1517 1421 1327 1243
Nominal public debt (EUR bn) 3548 3039 3187 3221 3233 3195 3132 3073 3006 2937
Memorandoum items
Real GDP Growth -72 -70 -39 06 29 37 35 32 30 26
GDP deflator inflation 12 -03 -21 -07 04 11 13 15 17 17
Primary fiscal balance ( GDP) -24 -13 08 16 30 45 45 43 43 42
Nominal interest rate on debt () 46 27 24 25 30 32 34 34 35 35
Nominal GDP (EURbn) 2085 1933 1821 1819 1879 1969 2064 2162 2265 2363
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Gross public debt ( GDP) 1179 1126 1079 1037 1001 962 926 892 858 824
Nominal public debt (EUR bn) 2897 2876 2863 2861 2868 2866 2868 2870 2872 2867
Memorandoum items
Real GDP Growth 20 19 19 19 19 19 19 19 19 19
GDP deflator inflation 19 20 20 20 20 20 20 20 20 20
Primary fiscal balance ( GDP) 40 40 40 40 40 40 40 40 40 40
Nominal interest rate on debt () 36 36 36 38 40 41 43 46 47 47
Nominal GDP (EURbn) 2457 2553 2654 2758 2867 2980 3097 3219 3346 3478
22
This decay function reproduces relatively well the shape of the impulse-response function by typical DSGE models for most of the permanents
fiscal shocks
23
24
20
o
o
o
o
o
o
o
o
21
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Gross public debt ( GDP) 1702 1572 1750 1771 1721 1622 1517 1421 1327 1243
Nominal public debt (EUR bn) 3548 3039 3187 3221 3233 3195 3132 3073 3006 2937
Memorandoum items
Real GDP Growth -72 -70 -39 06 29 37 35 32 30 26
GDP deflator inflation 12 -03 -21 -07 04 11 13 15 17 17
Primary fiscal balance ( GDP) -24 -13 08 16 30 45 45 43 43 42
Nominal interest rate on debt () 46 27 24 25 30 32 34 34 35 35
Nominal GDP (EURbn) 2085 1933 1821 1819 1879 1969 2064 2162 2265 2363
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Gross public debt ( GDP) 1179 1126 1079 1037 1001 962 926 892 858 824
Nominal public debt (EUR bn) 2897 2876 2863 2861 2868 2866 2868 2870 2872 2867
Memorandoum items
Real GDP Growth 20 19 19 19 19 19 19 19 19 19
GDP deflator inflation 19 20 20 20 20 20 20 20 20 20
Primary fiscal balance ( GDP) 40 40 40 40 40 40 40 40 40 40
Nominal interest rate on debt () 36 36 36 38 40 41 43 46 47 47
Nominal GDP (EURbn) 2457 2553 2654 2758 2867 2980 3097 3219 3346 3478
22
This decay function reproduces relatively well the shape of the impulse-response function by typical DSGE models for most of the permanents
fiscal shocks
23
24
21
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Gross public debt ( GDP) 1702 1572 1750 1771 1721 1622 1517 1421 1327 1243
Nominal public debt (EUR bn) 3548 3039 3187 3221 3233 3195 3132 3073 3006 2937
Memorandoum items
Real GDP Growth -72 -70 -39 06 29 37 35 32 30 26
GDP deflator inflation 12 -03 -21 -07 04 11 13 15 17 17
Primary fiscal balance ( GDP) -24 -13 08 16 30 45 45 43 43 42
Nominal interest rate on debt () 46 27 24 25 30 32 34 34 35 35
Nominal GDP (EURbn) 2085 1933 1821 1819 1879 1969 2064 2162 2265 2363
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Gross public debt ( GDP) 1179 1126 1079 1037 1001 962 926 892 858 824
Nominal public debt (EUR bn) 2897 2876 2863 2861 2868 2866 2868 2870 2872 2867
Memorandoum items
Real GDP Growth 20 19 19 19 19 19 19 19 19 19
GDP deflator inflation 19 20 20 20 20 20 20 20 20 20
Primary fiscal balance ( GDP) 40 40 40 40 40 40 40 40 40 40
Nominal interest rate on debt () 36 36 36 38 40 41 43 46 47 47
Nominal GDP (EURbn) 2457 2553 2654 2758 2867 2980 3097 3219 3346 3478
22
This decay function reproduces relatively well the shape of the impulse-response function by typical DSGE models for most of the permanents
fiscal shocks
23
24
22
This decay function reproduces relatively well the shape of the impulse-response function by typical DSGE models for most of the permanents
fiscal shocks
23
24
23
24
24