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)


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
Issue number1
Publication statusPublished - Mar 1 2013


ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics
  • Public Administration

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