Objective 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. Programme(s) FP7-PEOPLE - Specific programme "People" implementing the Seventh Framework Programme of the European Community for research, technological development and demonstration activities (2007 to 2013) Topic(s) FP7-PEOPLE-2011-CIG - Marie-Curie Action: "Career Integration Grants" Call for proposal FP7-PEOPLE-2011-CIG See other projects for this call Funding Scheme MC-CIG - Support for training and career development of researcher (CIG) Coordinator MIDDLE EAST TECHNICAL UNIVERSITY EU contribution € 100 000,00 Address DUMLUPINAR BULVARI 1 06800 Ankara Türkiye See on map Region Batı Anadolu Ankara Ankara Activity type Higher or Secondary Education Establishments Administrative Contact Irem Dikmen Toker (Prof.) Links Contact the organisation Opens in new window Website Opens in new window Total cost No data
