IMF Working Papers

Europe’s Debt (Un)Sustainability: Looking Through Bohn’s Magnifying Glass

By Aleš Bulíř, Khyati Chauhan

April 4, 2025

Download PDF More Formats on IMF eLibrary Order a Print Copy
More formats on IMF eLibrary Order a Print Copy

Preview Citation

Format: Chicago

Aleš Bulíř, and Khyati Chauhan. "Europe’s Debt (Un)Sustainability: Looking Through Bohn’s Magnifying Glass", IMF Working Papers 2025, 070 (2025), accessed May 20, 2025, https://doi.org/10.5089/9798229007849.001

Export Citation

  • ProCite
  • RefWorks
  • Reference Manager
  • BibTex
  • Zotero
  • EndNote

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

No large European countries and only few small ones have met the so-called Bohn rule during the past 40 years or so. The Bohn rule specifies that past increases of public debt need to be systematically compensated with current and future fiscal surpluses to stabilize debt at some steady-state level. We find that post-1980 European fiscal primary balances have been driven by spending growth and consumption smoothing. The results change little between periods before and after the global financial crisis.

Subject: Expenditure, Financial crises, Fiscal policy, Fiscal stance, Global financial crisis of 2008-2009, Output gap, Production, Public debt

Keywords: Ales Bulír, B. data transformation, Debt sustainability exercise, Estimates of the Bohn rule, Europe, Fiscal stance, Fiscal sustainability, Global, Global financial crisis of 2008-2009, Magnifying glass, Output gap, Public debt, The Bohn rule

Publication Details

You May Also Be Interested In...

West African Economic and Monetary Union: Staff Report on Common Policies for Member Countries-Press Release; Staff Report; and Statement by the Executive Director for the West African Economic and Monetary Union

May 19, 2025

Pakistan: First Review Under the Extended Arrangement Under the Extended Fund Facility, Requests for Modification of Performance Criteria and Request for an Arrangement Under the Resilience and Sustainable Facility -Press Release; Staff Report; and Statement by the Executive Director for Pakistan

May 17, 2025

Strengthening Fiscal Data Governance in Solomon Islands

May 16, 2025

Enhancing Effectiveness of Solomon Islands' Fiscal Framework

May 16, 2025