Budgetary sustainability in the presence of macroeconomic and financial market instability

An application to the case of Belgium

Bas Van Aarle, Jozef Konings

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

This paper develops a stylized budgeting framework to analyze the effects of macroeconomic shocks and government bond market conditions on public finances. We focus on the impacts of primary fiscal balance shocks, growth, and interest rate shocks on budgetary sustainability. We consider the effects of financial sector bailouts, uncertainty about aging costs and instability viz. speculation in government bond markets. The framework is applied to the case of Belgium, where recently these issues have played an important role. A scenario analysis of budgetary adjustment under alternative hypotheses is carried out to analyze Belgian fiscal sustainability over the next 20 years.

Original languageEnglish
Pages (from-to)114-134
Number of pages21
JournalPublic Budgeting and Finance
Volume33
Issue number1
DOIs
Publication statusPublished - Mar 2013
Externally publishedYes

Fingerprint

government bonds
financial market
Belgium
macroeconomics
sustainability
public finance
market
Belgian
speculation
interest rate
uncertainty
scenario
costs
Sustainability
Government bonds
Financial markets
Bond market
Macroeconomics

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics
  • Public Administration

Cite this

Budgetary sustainability in the presence of macroeconomic and financial market instability : An application to the case of Belgium. / Van Aarle, Bas; Konings, Jozef.

In: Public Budgeting and Finance, Vol. 33, No. 1, 03.2013, p. 114-134.

Research output: Contribution to journalArticle

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