Debt Development in Ireland and Spain: the Same or Different? Pre- and Post-crisis Analysis
The aim of this paper is to present the development of general government debt in two Eurozone countries: Ireland and Spain that suffered from serious imbalance in public finance during the last crisis. Prior to the crisis, both economies were developing well against the background of the whole Eurozone and had a relatively good situation in public finance. The genesis of the crisis was also quite similar in these two countries. The similarity of factors influencing the crisis and the pre-crisis high development of both economies were among the reasons for selection of these two countries to be compared. Thus, the article focuses on the outbreak of the crisis and the fiscal consolidation period of 2008-2015, however the pre-crisis analysis is also provided. The debt sustainability analysis carried out in the article shows the possibility of growing out of debt in both countries depending on the macroeconomic circumstances. Both Ireland and Spain have been aiming to achieve a primary surplus. Besides the similarity of pre-crisis conditions, in this respect, the progress was highly noticeable, especially in Ireland, where it resulted from a fiscal consolidation but also a high real GDP dynamics that supported the process. Due to this, Ireland has already managed to lower the debt-to- -GDP ratio and put it on a downward path. Spain, on the contrary, has recorded a high debt-to-GDP ratio which is still on the upward path and is forecasted to continue until 2016.(original abstract)
- Alesina A., Ardagna S. (2010): Large Changes in Fiscal Policy: Taxes versus Spending. "Tax Policy and the Economy", Vol. 24, No. 1, http://www.journals.uchicago.edu/ doi/abs/10.1086/656337 (accessed: 20.04.2016).
- Escolano J. (2010): A Practical Guide to Public Debt Dynamics, Fiscal Sustainability, and Cyclical Adjustment of Budgetary Aggregates. International Monetary Fund, Washington, D.C.
- European Commission (2007): Public Finances in EMU. European Economy, No. 3, Brussels.
- European Commission (2011): The Economic Adjustment Programme for Ireland. Occasional Papers, No. 76, Brussels.
- European Commission (2012): The Financial Sector Adjustment Programme for Spain. Occasional Papers, No. 118, Brussels.
- European Commission (2015a): Post-Programme Surveillance Report, European Economy. December, Institutional Paper 013, Brussels.
- European Commission (2015b): Assessment of the 2015 Stability Programme for Spain. 27 May, Brussels.
- European Commission (2015c): Assessment of the 2015 Stability Programme for Ireland. 27 May, Brussels.
- European Commission (2016a): European Economic Forecast. Winter, Institutional Paper 020.
- European Commission (2016b): Post-Programme Surveillance Report - Ireland, Autumn 2015. January, European Economy, Institutional Paper 017, Brussels.
- European Commission (2016c): Fiscal Sustainability Report 2015. January European Economy Institutional Paper 018, Brussels.
- IMF (2008): Fiscal Policy as a Countercyclical Tool. In: World Economic Outlook, October, Chapter 5.
- OECD (2010): Counter-Cyclical Economic Policy. Economics Department Policy Notes, May, No. 1, Paris.
- OECD (2015): The State of Public Finances 2015. Strategies for Budgetary Consolidation and Reform in OECD Countries. Paris, http://dx.doi.org/10.1787/9789264244290-en.
- Postuła M. (2014): Specific Factors Determining Optimal Accomplishments of Spending Reviews. "Journal of Economics and Management", Vol. 18, pp. 42-53.
- Stability Programme Update 2015-2018 (2015). Kingdom of Spain, http://ec.europa.eu/ europe2020/pdf/csr2015/sp2015_spain_en.pdf (accessed: 20.04.2016).
- Stability Programme Update 2015 (2015). http://ec.europa.eu/europe2020/pdf/csr2015/ sp2015_ireland_en.pdf (accessed: 20.04.2016).
- [www 1] AMECO database, http://ec.europa.eu/economy_finance/ameco/user/serie/Select- Serie.cfm (accessed: 20.04.2016).
- [www 2] ECB Statistical Data Warehouse, http://sdw.ecb.europa.eu/ (accessed: 20.04.2016).
- [www 3] Eurostat database, http://ec.europa.eu/eurostat/data/database (accessed: 20.04.2016).
- [www 4] OECD database, http://stats.oecd.org/ (accessed: 20.04.2016).