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Published in: Economic Policy

Volume 26, Issue 68, Pages: 599–647.

Article first published online: 3 OCT 2011 | DOI: 10.1111/j.1468-0327.2011.00270.x

The results for Finland and France have been labelled incorrectly in a number of instances with those for France attributed to Finland and vice-versa.

This has affected:

  • 1
     The debt and deficit GDP ratios reported in tables 1 and 2: the 2007, 2010 and 2011 data for France and Finland need to be switched.
  • 2
     The presentation of the results in tables 6 and 7: all the numbers are correct, but the row labelled FIN is in fact FRA and vice-versa.
  • 3
     The presentation of the results in tables 8 and 9, as the FSI results are copied from tables 6 and 7.
Table 1.   Government debt-GDP ratios for EU countries and the US, 1970–2011
YearPre-EMS 1970–77EMS 1978–98EMU 1999–201020072008200920102011
  1. Source: Authors’ calculations on OECD Economic Outlook data described in the Appendix.

AUS20.553.470.562.266.272.975.978.0
BEL58.9114.4102.688.193.5101.2102.5104.3
DEN41.767.148.431.639.845.353.755.2
FIN16.431.448.441.540.743.758.462.7
FRA33.243.673.269.975.784.592.497.1
GER20.142.167.665.368.877.479.981.3
GRE15.767.4112.0103.9102.6114.9129.2136.8
IRE32.197.943.028.348.565.8104.9112.7
ITA71.4102.1119.6112.5114.4123.6131.3132.7
NET56.580.563.552.165.871.474.677.6
POR6.150.971.771.175.283.892.998.7
SPA11.348.156.642.147.059.372.278.2
SWE28.364.458.347.947.152.751.348.8
UK60.246.650.746.956.871.081.388.6
EU33.359.768.359.964.472.978.780.9
US44.358.364.861.870.083.992.898.5
Table 2.   Primary Deficit-GDP ratio for EU countries and the US, 1970–2011
YearPre-EMS 1970–77EMS 1978–98EMU 1999–201020072008200920102011
  1. Source: Authors’ calculations on OECD Economic Outlook data described in the Appendix.

AUS0.23.32.20.70.54.34.43.4
BEL5.38.11.40.21.25.74.94.5
DEN−1.92.3−1.4−4.5−3.42.54.63.9
FIN−5.3−1.0−2.6−5.2−4.42.33.31.7
FRA0.13.03.72.73.48.27.46.1
GER1.52.72.3−0.20.03.24.02.9
GRE0.97.96.04.07.812.78.37.6
IRE5.86.01.4−0.27.212.232.39.5
ITA6.69.43.21.52.75.55.03.9
NET1.84.11.2−0.2−0.74.55.84.0
POR0.45.94.12.72.86.77.35.0
SPA0.14.61.8−1.94.19.69.26.3
SWE−4.42.8−0.9−3.8−2.52.01.20.6
UK2.53.63.72.75.312.69.68.1
EU0.13.71.6−0.70.85.55.44.0
US2.33.64.02.86.511.210.58.8
Table 6.   Annual adjustment to the deficit-GDP ratio required to restore the debt-GDP ratio to 2007 level (percentage points)
 Debt-GDP ratioAverage annual adjustment required to reach target debt-GDP by
CurrentTarget20162030
20112007BestMeanWorstBestMeanWorst
  1. Source: Authors’ calculations.

AUS78620.92.74.5−0.50.31.1
BEL10488−2.81.14.90.52.34.2
DEN55321.76.110.41.12.54.0
FIN6341−1.32.46.1−1.5−0.21.1
FRA97704.17.711.2−0.41.22.9
GER81651.94.16.40.51.62.7
GRE1371042.76.610.4−0.21.43.0
IRE113281.111.321.6−1.41.85.1
ITA1331121.33.35.4−0.40.71.9
NET78520.43.15.8−0.31.02.2
POR9971−0.83.27.2−0.70.92.4
SPA78420.13.36.5−0.70.51.8
SWE4948−4.7−0.53.8−1.20.21.7
UK89474.89.614.3−2.0−0.31.3
EU8160−1.51.54.5−1.00.00.9
US9962−2.01.95.80.01.22.5
Table 7.   Annual adjustment to the deficit-GDP ratio required to restore the debt-GDP ratio to 60% (percentage points)
 Debt-GDP ratioAverage annual adjustment to reach target debt-GDP ratio by
CurrentTarget20162030
2011 BestMeanWorstBestMeanWorst
  1. Source: Authors’ calculations

AUS78601.43.25.0−0.40.41.2
BEL104603.06.810.72.03.95.7
DEN5560−4.20.14.5−0.51.02.4
FIN6360−4.8−1.12.6−2.4−1.10.2
FRA97606.19.713.20.11.83.4
GER81603.05.27.40.81.93.0
GRE1376011.515.419.22.13.75.3
IRE11360−5.34.915.1−3.10.13.4
ITA1336012.014.016.12.43.54.7
NET7860−1.21.54.2−0.70.51.8
POR99601.45.49.4−0.11.43.0
SPA7860−3.5−0.32.9−1.6−0.40.8
SWE4960−7.3−3.01.2−1.9−0.51.0
UK89406.211.015.7−1.60.031.6
EU8160−1.61.54.5−1.00.00.9
US9960−1.72.26.10.11.32.6
Table 8.   Average annual adjustments required to restore the 2007 debt-GDP ratio in the medium run (2016) and the long run (2030) as predicted by the FSI, and the medium and long term tax gaps (percentage points)
 Average annual adjustment to reach target debt-GDP ratio in
Medium term (2016)Long term (2030)
FSIMTGFSILTGLTG*
BestMeanWorstBestMeanWorst
  1. Note: MTG = Medium term Tax Gap uses 5 year ahead projections of government expenditure from a linear trend; LTG = Long term Tax Gap uses 20-year ahead projections of government expenditure from a linear trend. LTG* = Long term Tax Gap uses official projections adjusted for population ageing (see text).

  2. Source: Authors’ calculations.

AUS0.92.74.52.3−0.50.31.12.92.1
BEL−2.81.14.92.90.52.34.24.68.4
DEN1.76.110.45.81.12.54.08.16.2
FIN−1.32.46.16.2−1.5−0.21.16.64.6
FRA4.17.711.28.1−0.41.22.911.69.2
GER1.94.16.44.80.51.62.75.76.7
GRE2.76.610.42.3−0.21.43.05.05.0
IRE1.111.321.63.9−1.41.85.13.117.2
ITA1.33.35.45.2−0.40.71.99.23.6
NET0.43.15.81.7−0.31.02.21.410.3
POR−0.83.27.212.0−0.70.92.418.513.7
SPA0.13.36.57.8−0.70.51.810.68.1
SWE−4.7−0.53.83.2−1.20.21.72.4−2.6
UK4.89.614.31.4−2.0−0.31.32.615.3
EU−1.51.54.54.0−1.00.00.95.06.4
US−2.01.95.85.00.01.22.56.811.5
Table 9.   Average annual adjustments required to restore the 60% debt-GDP ratio in the medium run (2016) and the long run (2030) as predicted by the FSI, and the medium and long term tax gaps (percentage points)
 Average annual adjustment to reach 60% debt-GDP ratio in
Medium term (2016)Long term (2030)
FSIMTGFSILTGLTG*
BestMeanWorstBestMeanWorst
  1. Note: MTG = Medium term Tax Gap uses 5 year ahead projections of government expenditure from a linear trend; LTG = Long term Tax Gap uses 20-year ahead projections of government expenditure from a linear trend. LTG* = Long term Tax Gap uses official projections adjusted for population ageing (see text). The debt-GDP target used for the United Kingdom is 40%. Source: Authors’ calculations.

AUS1.43.25.05.9−0.40.41.23.83.0
BEL3.06.810.711.82.03.95.76.910.8
DEN−4.20.14.54.9−0.51.02.47.86.0
FIN−4.8−1.12.66.8−2.4−1.10.26.94.8
FRA6.19.713.215.50.11.83.413.511.2
GER3.05.27.49.00.81.93.06.87.8
GRE11.515.419.217.72.13.75.39.09.1
IRE−5.34.915.114.5−3.10.13.45.920.0
ITA12.014.016.119.82.43.54.713.07.5
NET−1.21.54.25.3−0.70.51.82.311.2
POR1.45.49.419.7−0.11.43.020.615.7
SPA−3.5−0.32.911.5−1.6−0.40.811.69.1
SWE−7.3−3.01.21.0−1.9−0.51.01.8−3.2
UK6.211.015.711.1−1.60.031.65.117.8
EU−1.61.54.58.2−1.00.00.96.17.5
US−1.72.26.112.70.11.32.68.813.6

In table 8 the results for MTG, LTG and LTG* are reported correctly. But in table 9 the results MTG, LTG and LTG* are wrong as they are based on switched end-of-period debt-GDP ratios.

The text of the paper remains unchanged except for the following items:

Page 602.

The sentence:

“The European countries comprise those currently having fiscal difficulties, namely, Greece, Finland, Ireland, Italy, Portugal, Spain and the United Kingdom together with Austria, Belgium, Denmark, France, Germany, the Netherlands and Sweden.”

should be amended to:

“The European countries comprise those currently having fiscal difficulties, namely, Greece, France, Ireland, Italy, Portugal, Spain and the United Kingdom together with Austria, Belgium, Denmark, Finland, Germany, the Netherlands and Sweden.”

Page 612.

The sentence: “In 2011 only three countries (France, Germany and Sweden) are below the Stability and Growth Pact (SGP) limit of 3%”

should be amended to:

“In 2011 only three countries (Finland, Germany and Sweden) are below the Stability and Growth Pact (SGP) limit of 3%”

Page 628.

The first line below table 6:

“studied (Denmark, Finland, Germany, Greece, Ireland and the United Kingdom)”

should be amended to:

“studied (Denmark, France, Germany, Greece, Ireland and the United Kingdom)”.

The sentence:

“the fourteen EU countries studied (Belgium, Finland, Germany, Greece, Ireland, Italy, Portugal and the United Kingdom) would need to reduce their debt-GDP ratios by more than four percentage points per annum and four (Finland, Greece,”

should be amended to:

“the fourteen EU countries studied (Belgium, France, Germany, Greece, Ireland, Italy, Portugal and the United Kingdom) would need to reduce their debt-GDP ratios by more than four percentage points per annum and four (France, Greece,”

Page 637.

The sentence:

“The MTG is great than the FSI measure for Belgium, France, Germany, Italy, Portugal, Spain, Sweden and the United States, and lower for the other countries.”

should be amended to:

“The MTG is greater than the FSI measure for Belgium, Finland, France, Germany, Italy, Portugal, Spain, Sweden and the United States, and lower for the other countries.”

Page 640.

The sentence:

“The countries whose fiscal stances have deteriorated most in the current recession are Denmark, Finland, Greece, Ireland, Spain, the United Kingdom and the United States.”

should be amended to:

“The countries whose fiscal stances have deteriorated most in the current recession are Denmark, France, Greece, Ireland, Spain, the United Kingdom and the United States.”

The sentence:

“In the medium term (5 years ahead) six of the fourteen EU countries studied (Denmark, Finland, Germany, Greece, Ireland and the United Kingdom) would need to reduce their debt-GDP ratios by more than four percentage points,”

should be amended to:

“In the medium term (5 years ahead) six of the fourteen EU countries studied (Denmark, France, Germany, Greece, Ireland and the United Kingdom) would need to reduce their debt-GDP ratios by more than four percentage points,”

The updated versions of the tables mentioned above based on the correct data are: