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Sustainability of Austrian public debt: a political economy perspective

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Abstract

Sustainability of Austrian public debt is investigated in the context of political objectives such as stabilizing the business cycle, increasing chances for being re-elected and implementing the ideologies of political parties. Several tests indicate that Austrian fiscal policies were sustainable in the period 1960–1974, while from 1975 on, public debt grew much more rapidly. The development of public debt in Austria seems to be driven not primarily by ideology, but by structural causes and a shift in the budgetary policy paradigm. We find some empirical evidence that governments in Austria dominated by one party run higher deficits than coalition governments. There are no indications of a political business cycle.

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Authors and Affiliations

  1. Department of Economics, Klagenfurt University, Universitaetsstrasse 65-67, A-9020, Klagenfurt, Austria

    Gottfried Haber & Reinhard Neck

Authors
  1. Gottfried Haber
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  2. Reinhard Neck
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Correspondence to Reinhard Neck.

Additional information

The research presented here was supported by the Ludwig Boltzmann Institute for Economic Analyses (Vienna) and the Jubiläumsfonds of the Oesterreichische Nationalbank

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Haber, G., Neck, R. Sustainability of Austrian public debt: a political economy perspective. Empirica 33, 141–154 (2006). https://doi.org/10.1007/s10663-006-9012-1

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  • DOI: https://doi.org/10.1007/s10663-006-9012-1

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