RANK CORRELATION BETWEEN BUDGET DEFICIT AND PUBLIC DEBT LEVELS IN EUROPEAN COUNTRIES "THE SPEARMAN COEFFICIENT"

2025/12/19 by TOUNSI, Mourad

paper · doi:10.48375/imist.prsm/remses-v10i3.59469

Abstract

France’s 2025 budget crisis highlights tensions between fiscal discipline and democratic governance. This study examines the deficit-debt relationship across the EU, finding a strong correlation (ρ=0.77) that supports Keynesian debt dynamics but challenges Ricardian equivalence. Denmark’s low debt despite surpluses aligns with the Buchanan-Wagner hypothesis of institutional constraints. Methodologically, « Spearman’s ρ addresses non-parametric data needs, with 60% variance explained (Domar’s framework). Results contradict Woodford’s fiscal theory but support Alesina’s context-dependent consolidations and Feldstein’s twin deficits hypothesis, moderated by Mundell-Fleming constraints. Non-linear thresholds (Ghosh) and electoral cycle limitations (Drazen) suggest the need for flexible, country-specific EU fiscal rules. Keywords: Budget Deficit, Public Debt, Spearman Correlation, European Union, Stability and Growth Pact, Critical Thresholds

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