Rise of Public Debt in EU Countries Due to the Coronavirus — Post-recovery Public Debt Rates along with Different Recession Scenarios

Abstract

Economics is also expected to try to say something to the future in addition to exploring the facts of the past. It is not its primary task to make forecasts, but it cannot ignore it, especially during non-crisis periods. My study aims to use an econometric model to provide a forecast of the expected rates of increase in public debt in the Member States of the European Union caused by the coronavirus epidemic. I carry out the study assuming four different versions of the course of the crisis, and in the fifth scenario, I analyze the macroeconomic situation when the crisis ends. In any epidemic model, the expected increases in government debt resulting from the calculations are widely spread across countries. However, critical values are expected to be reached for Greece, Italy, and Spain.