scholarly journals How EURO shrinks democracy: Insights from the Greek crisis

2015 ◽  
Vol 4 (4) ◽  
pp. 135-146
Author(s):  
Alberto Lanzavecchia ◽  
Eugenio Pavarani ◽  
Giulio Tagliavini

The adoption of a single currency in Europe is a pure political project. What we have learned from Greek crisis is that being in the Eurozone means that creditors can destroy a national economy and seize public assets if the government steps out of line. To keep the European project alive, we here call for a fundamental reform on sovereign debt: switching from a goal to which policy is constrained, back to a tool to serve policy aims. In a distressed country, lenders has the power to forces the borrower to accept and to adopt restrictive spending policies that defend their interest at the expense of citizen’s ones. Eventually, this leads inevitably to the loss of autonomy in borrower’s decisions on fiscal policy, spending policy, public properties. If the cause for this degenerative process is the privilege on sovereign debt, then we need to find a new framework that reclassifies the public debt as functional to human development rather than individual profits. A country shall not be allowed to repay a debt that goes beyond its repayment capacity. The maximum payback capacity shall be settled before the credit is granted as a fraction of its primary balance. As such, the amount of primary balance not pledged to the repayment of the debt shall be always available to the government to undertake investments, social or security expenses and to face unexpected events. If this rule were implemented, the capital market would be automatically regulated: the debt that exceeds that threshold would be automatically written-off.

2013 ◽  
Vol 16 (2) ◽  
pp. 45-62
Author(s):  
Ryszard Piasecki ◽  
Erico Wulf Betancourt

A budget surplus arises in a country when the total revenue earnings surpass expenditures in a particular financial year. Having a budget surplus is very important in the sense that it brings about a decrease in the net public debt, while the public debt is increased in the event of a budget deficit. Both budget deficits and budget surpluses also exert indirect influences on taxpayers. Normally, it is not essential on the part of the government to maintain a budget surplus, though it needs to be very careful when running a budget deficit to have the proper buffer.  


Subject Turkey's fiscal sustainability. Significance By keeping fiscal deficits low, the government has steadily reduced the public debt to about 33% of GDP. However, fiscal policy is now shoring up growth. There is also concern about the lack of further public financial reform, insufficient transparency and contingent liabilities. Impacts Wider budget deficits may not affect growth notably, given the weak global economy and low private investment and investor confidence. Turkey will have one of Europe's lowest public-debt levels, but investors may need to pay more attention to public finances. Fiscal policy could join more urgent worries about politics, the current-account deficit, private-sector debt and monetary policy.


2019 ◽  
Vol 7 (4) ◽  
pp. 285-290
Author(s):  
Imron Mawardi ◽  
Tika Widiastuti ◽  
Debrina Farrah Anova ◽  
Muhammad Ubaidillah Al Mustofa ◽  
Dewie Saktia Ardiantono ◽  
...  

Purpose of the study: This study aims to examine foreign debt as a source of financing for economic development. This research is expected to provide (1) an overview of debt as a source of funding for state projects, (2) investigate its impacts and (3) offer additional knowledge of its Islamic perspective. Methodology: This research is a qualitative study using the study literature approach. This research is conducted by analysing books, literature, journals, and magazines with themes related to the focus of the discussion on this study. It is expected that the method used can provide insight, general knowledge, and develop the view of Islam in relation to foreign debt. Main Findings: The government has to ensure that the state has the ability to pay off its obligations in the future; guarantee that loans have to be free from interest; prioritize taking loans from internal sources rather than external sources. In Addition, debts are not intended for deferred needs and not taking loans that exceed their needs. Applications of this study: basically the results of this study can be applied to any country that considers the use of public debt, like other Islamic systems. Novelty/Originality of this study: This research is conceptual research in an Islamic perspective. This study successfully examined comprehensively related to the public debt with the Islamic approach.


2015 ◽  
Vol 4 ◽  
pp. 85-89
Author(s):  
Yadab Raj Sharma

The public debt or public borrowing in Nepal is considered to be an important source of income of the government. Public debt helps to achieve targeted economic growth and to narrow down the gap between expenditure and revenue. However, the country is falling into debt trap in the form of interest and principal payment. In this article an attempt has been made to find out the situation, trend and impact of public debt on Nepalese economy.DOI: http://dx.doi.org/10.3126/av.v4i0.12363Academic Voices Vol.4 2014: 85-89


Significance The package could be the government's swan song. One coalition party, the centre-right Bridge (Croatian: Most) of Independent Lists, strongly supported a reform agenda from the beginning, but Croatia's main nationalist party, the Croatian Democratic Union (HDZ), did not. This, in addition to key appointments, has become a major point of dispute between them, blocking decision-making. HDZ leader Tomislav Karamarko has been frustrated in his ambition to control the government and especially the security apparatus. Impacts Political instability could cause further political and ethnic tensions, with uncertain outcomes. Persistent deadlock will worsen Croatia's parlous economic and social situation. Instability could frustrate consolidating Croatia's exit from its six-year recession in 2015 and reducing the public debt from 87% of GDP.


Significance The review will take into account the effects of measures taken thus far, in particular the flotation of the Egyptian pound, and will assess the government’s budget for the 2017-18 (July-June) fiscal year. Impacts The government will struggle to reduce the deficit because of the scale of public debt and the record high domestic interest rate. Government expenditure on wages will rise at a much lower rate than inflation. The public will also face further rises in indirect taxation, revenue from which is projected to rise by 40%. The IMF is unlikely to raise any serious objections to the government’s plans.


2017 ◽  
Vol 9 (1) ◽  
pp. 34-49 ◽  
Author(s):  
Stephanos Papadamou ◽  
Trifon Tzivinikos

Purpose This paper aims to investigate the effects of contractionary fiscal policy shocks on major Greek macroeconomic variables within a structural vector autoregression framework while accounting for debt dynamics. Design/methodology/approach The sign restriction approach is applied to identify a linear combination of government spending and government revenue shock simultaneously while accounting for debt dynamics. Additionally, output and unemployment responses to fiscal shocks under different scenarios concerning the amalgamation of austerity measures are considered. Findings The results indicate that a contractionary consumption policy shock, namely, a 1 per cent decrease in government consumption and a 1 per cent increase in indirect taxes, is preferred, as it produces a minor decrease in output and substantially decreases public debt, while a contractionary wage policy shock is suitable only when the government aims to sharply reduce public debt, as the consequences for the economy are harsh. A contractionary investment policy shock is not recommended, as it triggers a rise in unemployment and a fall in output, while the effect on the public debt is minor. Practical implications Policymakers should focus their efforts on reducing unproductive government consumption on the expenditure side. Concerning revenues, the reinforcement of tax administration is recommended to ensure that indirect taxes will be collected. Originality/value This paper contributes to the existing literature by providing a disaggregated analysis of the effects of fiscal policy actions in Greece by implementing several fiscal policy scenarios and accounting for the level of public debt. All scenarios are in the vein of the economic adjustment programs guidelines.


Ekonomista ◽  
2021 ◽  
Vol 6 ◽  
Author(s):  
Maciej WYSOCKI ◽  
Cezary WÓJCIK

In 2016–2019 Poland experienced a major social and fiscal policy shift: new government decreased the statutory retirement age and launched several new social programs, including the sweeping Family 500+ program under which social expenditure on family and children support increased suddenly from 1.5% to nearly 3% of GDP. Moreover, VAT gap reduction policies have been implemented swiftly. The new policy move became highly controversial. Many economists argued that overall it would lead to a significant deterioration of long-term fiscal sustainability. The government argued in turn that the new program was well financed by a complementary policy of VAT gap reduction and saw no risk to country’s fiscal sustainability. This paper provides one of the first evidence of the adverse effect of the policy shift on long-term fiscal sustainability. The analysis reveals that fiscal sustainability parameters have deteriorated significantly after 2016. Overall, the estimations presented in the paper show that in the period of 2016–2019 fiscal sustainability parameters may have been the lowest since Poland joined the EU in 2004. While these results should be treated with caution as they draw on very recent time series, the deterioration of Poland’s fiscal sustainability raises a pertinent policy question related to country’s capacity to respond to the COVID-19 pandemic, in particular in terms of the ability to use standard and non-standard fiscal policy instruments and monetary policy tools in response to the shock.


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