Optimal versus actual maturity of government debt : the case of Greece

The purpose of the present paper is to examine theoretically and empirically how the maturity structure of government debt is affected by changes in its main macroeconomic determining factors. We organize our investigation around a maturity-structure model for Greece in which the optimal (annual) average maturity of a total of outstanding government bonds of different maturities is estimated over a thirty-year period. The optimal maturity level is then compared with the corresponding observed or actual level. We then use our empirical estimates to determine the response of optimal maturity to changes in its main determinants and make suggestions for corrective fiscal policy actions.