Old wine in a new bottle: public debt sustainability - evidence from a number of EU countries under fiscal consolidation

Nicholas Apergis


This paper re-investigates the issue of public debt sustainability in the case of five European Union (EU) countries either under bailout programmes or adopting fiscal consolidation measures spanning the period 1980-2014. The empirical analysis makes use of the methodology of nonlinear unit root testing and the results provide robust evidence in favour of public debt sustainability for four countries, excluding Greece. These robust finding suggest that the current austerity programme adopted by the Greek economy triggers upward debt spirals contributing to its unsustainability and, therefore, growth oriented policies should be the primary ingredient of a different programme for the country to fiscally and economically survive.

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DOI: https://doi.org/10.17811/ebl.4.4.2015.131-136


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