The name is absent

Table 2.6

Notes: (1a) The model includes an intervention in 1993 to correct for the effect of large statistical revisions of debt
levels that took place in such a year;

(1b) The model includes an intervention in 1995 when the debt rose by almost 8 percentage points ¾ of which was
explained by a stock-flow adjustment;

(1c) The model includes a non-linear term, positive in the cases of Portugal and the US and negative in the UK;
(1d) The model includes a dummy taking value 1 between 1990 and 1992, the coefficient of which is negative and
significant at 1% (-0.15) in Finland and at 5% (-0.05) in Sweden;

(2) The dummy takes value 1 between 1993 and 2000;

Standard errors are shown below the parameter estimate:

'***' significant at 1%, '**' significant at 5%, '*' significant at 10%.

Source: European Commission for EU15 and OECD for US and Japan.

If the whole period is considered (see column 'DEBT' in Table 2.6) there is no country for
which a negative and statistically significant reaction to debt has been estimated.
Moreover, in some euro area countries such as Belgium, Greece, Spain, Ireland, the
Netherlands and Austria, the reaction of the primary balance to the stock of debt was
increased either after 1993, thus linked to the adoption of the Maastricht Treaty and the
convergence criteria, or after 1996, thus in the aftermath of the formal launching of the

and/or the reduction of the growth dividend. In the case of Germany the intervention takes place in
1995, when the new Erblastentilgungsfonds (administered by the federal level) took over the debt
from the Treuhandanstalt, which privatized the assets of the former East-Germany and accumulated
debt in order to make the companies fit for privatization (or cover the social payments if companies
were liquidated). The new fund also took over a debt stock of about 7% of GDP. While they do not
have a significant impact on the estimates of debt reaction, the inclusion of such interventions
improves the adjustment and the specification tests.

39

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