Hertie School Professor of Public Management and Political Economy Mark Hallerberg and Post-doctoral Researcher Christopher Gandrud have written a paper examining how governments may be incentivised to report economically favourable numbers when filing their public debt statistics to Eurostat, the European Union’s statistical office. The paper, Interpreting Fiscal Accounting Rules in the European Union, was published by CESifo in December and will also be published in the Journal of European Public Policy in 2017.
Governments want their debt levels to appear as low as possible, as it improves their standing internationally and domestically, Hallerberg and Gandrud say. Thus, the researchers expected countries to present numbers that Eurostat, which monitors their debt levels, would then revise upwards. They found that debts are more likely to be revised upwards for eurozone countries, when governments have high levels of debt and in years when there are unscheduled elections. “Financial stress strengthens these effects,” they said.
Find the paper on CESifo here.