Search results for query: Ptak

  1. Fiscal Policy of Germany and France. Since Euro Creation Up to Pandemic

    Author: Piotr Ptak

    See Issue Contents: fins.2022.2


    The aim of this article is to demonstrate the development of general government debt and general government balance in two Eurozone countries: Germany and France in order to investigate the extent of fulfilment of the convergence criteria. The article is divided into two periods: from the creation of the Euro currency to the period before the global financial crisis and after it to the time of the pandemic. France and Germany notoriously violated the rules of the Stability and Growth Pact. The beginning of the crisis was a sharp rise in the deficit and debt-to-GDP ratio to over 80% in both countries followed by a fiscal consolidation period. As a result, Germany managed to reduce its debt to 60% of GDP, in line with the SGP requirements, while in France this indi-cator achieved the level close to 100% in 2019. The methodology adopted by the author is based on an analytical approach and a literature review of the subject (see Escolano, 2010). Based on this methodology, the debt sustainability analysis of the general government sector was carried out. The analysis illustrates the changes to be implemented to the primary balance to allow both countries to grow out of debt. According to the author, France should have car-ried out the necessary structural reforms, but above all, reduce the ratio of pub-lic expenditure and revenues to GDP, which is the highest in Europe. Other-wise, if interest rates of ECB continue to rise, France may face a critical situation.

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