Fiscal Sustainability in Europe (FISCSUST)

The purpose of this research project is to develop a new theoretical framework in evaluating the sustainability of fiscal policy and evolution of debt with particular emphasis on recent European experience. Fiscal or debt sustainability in literature in its most stylized form is defined as satisfying an inter-temporal budget constraint. Although it serves as a useful benchmark lower bound based on 'ability' to pay, this is a very crude approach due to its disregard of many interesting dynamics economic and political sphere contains related to 'willingness' to pay as for political decision makers with limited life spans that depend on public approval, it is really hard to make the distinction between the notions ‘ability’ and ‘willingness’ to pay. In this project we aim to introduce measures and develop a framework that incorporates these neglected dimensions in existing literature. We will do so by building general equilibrium models that endogenize optimal fiscal policy making in environments that have richer preference and constraints structure that resemble what we observe as practical fiscal policy making sphere more. This framework will allow us to investigate the dynamic interaction of fiscal policy with political sphere in the form of preferences and institutional constraints. We will also specifically focus on the evaluation of ‘fiscal rules’ in a dynamic stochastic general equilibrium framework that allows for welfare analysis as well. To be more precise, we will be able to find endogenous sustainability thresholds under different preference and environment scenarios. This will provide us with valuable insights that can be translated into policy sphere and possibly tested against data.


Redistribution of power and status through public finance: the case of Turkey (1980-2003)
Cangöz, M. Coşkun; Şen, Mustafa; Department of Sociology (2009)
This dissertation explores whether fiscal policies can be used as a means of redistribution of power and status, and the ways of transferring state’s economic power to social groups. In this regard, state budget is recognized as the main tool for the execution of redistributive policies of the governments. In this framework, this study investigates how budget was employed to change power balance of social groups during the period of 1980-2003, in Turkey. In order to measure the changing power balances budge...
Public debt and growth: an empirical investigation
Canbek, Duygu; Özmen, Erdal; Department of Economics (2014)
We investigate the relationship between public debt and growth for a panel sample of 128 countries including 26 advanced, 40 emerging and 62 developing economies for a period of 1960-2011. To this end, we consider not only the conventional fixed effects procedure but also the recently developed cross sectionally augmented distributed lag (CS-DL) mean group (MG) procedure. We also investigate whether the relationship is robust to different country groupings such as advanced, emerging and developing economies...
The sustainability analysis of Turkish domestic debt
Alkan, Feyza; Öcal, Nadir; Department of Economics (2009)
In this thesis, sustainability of the Turkish domestic debt is analyzed within the “sustainability indicators” perspective. The fiscal targets of Maastricht Treaty (1992) are imposed on the Turkish fiscal policy and it is investigated whether these targets are the indicators for sustainability in the medium term. Uctum and Wickens’ (2000) methodology is followed in assessing the sustainability of the current fiscal policy and the efficiency of the Maastricht Treaty (1992) targets. Moreover, the vector auto ...
Politics of neoliberal transformation: a comparative analysis of debt-led consumption and crisis in Turkey and Greece
Durmaz, Günseli; Bedirhanoğlu Toker, Pınar; Department of International Relations (2015)
This thesis analyzes the neoliberal transformations of Greece and Turkey and the role of debt-led economic development strategy in this process. In order to explain historical specificities of these cases that identify the change today, a comparative historical analysis will be conducted. With this aim, the complex and multilateral relationship between state, market, international institutions and the constitutive of financial credits will be explored and the scope of this thesis will be confined to to the ...
Managing financial instability in emerging markets: A Keynesian perspective
Akyüz, Yılmaz (Orta Doğu Teknik Üniversitesi (Ankara, Turkey), 2008-6)
The Keynesian analysis of financial instability as developed by Hyman Minsky provides considerable insights into understanding the nature and dynamics of boom-bust cycles driven by international capital flows in emerging markets. Its main policy conclusion that financial control rather than macroeconomic policy holds the key to financial stability is equally valid. There is, however, need to develop a new approach to financial control and place greater emphasis on managing capital inflows than has hitherto ...
Citation Formats
Ö. K. Parmaksız and İ. Dikmen Toker, “Fiscal Sustainability in Europe (FISCSUST),” 2015. Accessed: 00, 2020. [Online]. Available: