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Article
STEADY STATE OF SOVEREIGN DEBT IN EU COUNTRIES
Arvydas Kregzde
ABSTRACT.The steady state of debt in this article means that the stock of government debt does not change over the time. The paper reveals that the rule of the Stability and Growth Pact concerning the ceiling of 3% for the budget deficit is not sufficient to have a steady or non-increasing state of the debt. Great varieties of GDP growth and initial outstanding stock of the debt in the EU countries allow very substantial growth of the debt as well as decrease of the debt for individual country, despite the rule of 3% in place. The conclusions are based on the statistical data and the model of integral presentation form of the debt. The Stability and Growth Pact requirements should be put together with economic indicators of individual country and simulation of the debt development in the future defining the budget deficit and managing country debt. .
KEYWORDS: budget, budget deficit, government debt, sustainability, steady state, ceiling of budget, EU.
JEL classification: E60, E62, H61, H62, H63.