What are the best policies to reduce public debt?: a comparative analysis of four case studies

• Autor(a) principal: Dias, Ricardo Manuel de Abreu
• Data de Publicação: 2017
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10071/15807
• topic: Public debt; Fiscal consolidation; Structural reforms; Counter-cyclical policies; Política económica; Crise financeira - 2008; Dívida pública; Controlo orçamental; Ajustamento estrutural; Ciclo económico; Alemanha; Irlanda; Portugal; Suécia

The financial crisis of 2008 constituted an asymmetrical external shock of tremendous proportions that gravely affected the Eurozone. In the face of a deep recession, the coordinated introduction of expansionist monetary and fiscal policies became imperative. However, the resulting extraordinary increase in public debt raised the alarm about a generalized sovereign debt crisis. Firstly, this thesis aims to assess in what extent and under what conditions have policies succeeded in guaranteeing a sustainable public debt trajectory. In addition, is discussed the relevance of complementary dimensions such as the structural reforms, the role of the counter-cyclical policies and potential impacts that size and composition have on successful adjustments. A comparative analysis of four case studies - Germany, Ireland, Portugal and Sweden - is conducted to evaluate the significance of each dimension in their respective public debt trajectories between 2000 and 2016. We find that, for this group of countries, the most determinant condition for a successful debt stabilization is a favourable growth dynamic followed by the Eurozone's membership. Furthermore, we find that the impacts of welfare state and labour market structural reforms on debt stabilization are quite limited. As for countercyclical policies, the adequate approach should comprise consolidations during a boom and expansions during a recession. Although, in the current context of the Eurozone the latter is substantially restricted. Finally, aspects related with the size and composition does not affect the outcome of adjustments directly but only indirectly through changes in economic growth.