International Tax and Public Finance

, Volume 21, Issue 3, pp 436–467 | Cite as

Fiscal sustainability in the presence of systemic banks: the case of EU countries

  • Agnès Bénassy-QuéréEmail author
  • Guillaume Roussellet


We provide a first attempt to include an off-balance sheet, implicit insurance to SIFIs into a consistent assessment of fiscal sustainability, for 27 countries of the European Union. We first calculate tax gaps à la Blanchard (OECD Economics Department Working Papers, No 79, 1990) and Blanchard et al. (Revue économique de l’OCDE, 1990). We then introduce two alternative measures of implicit off-balance sheet liabilities related to the risk of a systemic bank crisis. The first one relies on microeconomic data at the bank level. The second one is based on econometric estimations of the probability and the cost of a systemic banking crisis. The former approach provides an upper evaluation of the fiscal cost of systemic banking crises, whereas the latter one provides a lower one. Hence, we believe that the combined use of these two methodologies helps to gauge the range of fiscal risk.


Fiscal sustainability Tax gap Systemic banking risk Off-balance sheet liabilities 

JEL Classification

H21 H23 J41 


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Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  1. 1.Paris School of EconomicsUniversity Paris 1 and CESifoParis cedexFrance
  2. 2.Banque de France, CREST and CEREMADEParisFrance

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