Bringing French public debt down: The options for fiscal consolidation

Arbeitspapier

France has a track record of persistent general government deficits, partly reflecting pro-cyclical fiscal policies in upswings. This has resulted in a quadrupling of its public debt-to-GDP ratio since the 1970s to above 80% of GDP. Reducing public debt is crucial because a high level of public debt may hamper long-term growth and may have a direct impact on fiscal sustainability if long-term interest rates rise. Bringing back public debt to 60% of GDP even by 2030 would require a fiscal effort of 4 to 5 percentage points of GDP (under the assumption of unchanged long-term rates), implying permanent primary general government surpluses, which is very ambitious in view of French fiscal history since 1970. The government's consolidation programme, which is aimed at reducing the general government deficit to 3% of GDP by 2013, represents around two-thirds of this effort. This study analyses how fiscal governance could be improved by the creation of a structural deficit rule and looks at ways the public deficit could be lowered. With France already having a very large public sector, most of the effort should be borne by holding down spending. Better control of the public wage bill, increasing public-sector efficiency and tackling age-related costs are the obvious candidates to contain expenditure. On the revenue side, there is significant potential for cutting tax expenditures. Furthermore, eliminating distortions in the tax base would encourage economic growth.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: CESifo Working Paper ; No. 3928

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Structure and Scope of Government: Other ; Taxation and Subsidies: Efficiency; Optimal Taxation ; Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies ; Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes ; Business Taxes and Subsidies including sales and value-added (VAT) ; National Government Expenditures and Health ; National Government Expenditures and Related Policies: Infrastructures; Other Public Investment and Capital Stock ; Social Security and Public Pensions ; National Deficit; Surplus ; National Debt; Debt Management; Sovereign Debt ; State and Local Taxation, Subsidies, and Revenue ; State and Local Budget and Expenditures
• Thema: public debt ; general government deficit ; fiscal rule ; structural deficit ; fiscal council ; government spending ; tax revenues ; local governments ; pension system ; healthcare ; tax expenditure ; Haushaltskonsolidierung ; Öffentliche Schulden ; Frankreich

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Egert, Balazs
• Ereignis: Veröffentlichung
• (wer): Center for Economic Studies and ifo Institute (CESifo)
• (wo): Munich
• (wann): 2012

Weitere Informationen

• Handle: http://hdl.handle.net/10419/64856
• Letzte Aktualisierung: 10.03.2025, 11:41 MEZ