Has France Become a Deficit Running Country?1

Abstract

The main purpose of this chapter is to review the French public finances over a long horizon in order to examine whether the common view, largely shared during the latest presidential election, according to which French governments have always been ‘deficit runners’, is right. In fact, we show that French deficits since 1980 have stemmed from: (i) the large gap between long-term interest rates and economic growth in the early 1980s; (ii) high unemployment and low economic growth, most notably during the recession of the early 1990s whose effects have been felt until recently; and (iii) pro-cyclical policies related to the electoral cycle.