We use a dynamic game model of a two-country monetary union to study the impacts of an exogenous fall in aggregate demand, the resulting increase in public debt, and the consequences of a sovereign debt haircut for a member country or bloc of the union. Two different scenarios for such a haircut...

Was unsustainable fiscal policy one of the reasons for the recent crisis in Spain? This is tested by examining how the government’s primary surplus is reacting to the debt-GDP ratio. Using different models for the explanatory variables and the consideration of the correct detrending method led...

In this paper, we simulate a macroeconometric model of Slovenia over the period 2012–2060, using the projected demographic development as input, and determine time paths for budgetary and macroeconomic variables under alternative assumptions about Slovenian policy instruments so as to limit...