Sustainability of national debt in Europe

Sustainability of Public Debt

Fiscal Policy Rules and the Sustainability of Public Debt in Europe

In this paper, the sustainability of public debt is interpreted as the result of the interaction of fiscal policy with the economic environment, and not as a statistical concept as in most of the recent literature. If debt must not explode over time, policy makers have to respond to the changing conditions in the macroeconomic environment. This paper defines the conditions which will ensure com...

The Sustainability of Public Debt in Taiwan

This study examines whether the Taiwan’s public debt is sustainable utilizing an unrestricted two-regime threshold autoregressive (TAR) model with an autoregressive unit root. The empirical results show that Taiwan’s public debt appears as a nonlinear series and is stationary in regime 1 but not in regime 2. This result implies that while Taiwan’s public debt was mostly sustainable over the 199...

Collateral, liquidity and debt sustainability

We study the sustainability of public debt in a closed production economy where a benevolent government chooses fiscal policies, including haircuts on its outstanding debt, in a discretionary manner. Government bonds are held by domestic agents to smooth consumption over time and because they provide collateral and liquidity services. We characterize a recursive equilibrium where public debt am...

National debt sustainability and the dynamics in the economy of Diamond

We analyze the e ect of constant debt policy on capital accumulation and provide an in depth treatment of the dynamics in the economy of Diamond. We derive the conditions for avoiding debt crisis in both the short-run and the long-run and provide geometrical tools to analyze the issue of sustainability. There is always a level of debt ensuring that any level of capital between 0 and an upper li...