Sustainable Fiscal Policy with Rising Public Debt-to-GDP Ratios

In financial and economic policy circles concerned with public debt in developingcountries, a rising debt-GDP ratio is interpreted as a signal of overborrowing, warn-ing of debt defaults if strong fiscal corrections are not adopted in time. This papershows why this interpretation is incorrect by building a simple model of fiscal policy inwhich upward-sloping debt paths are observed even though the probability of defaultis \almost surely" equal to zero.[...]

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Year of publication:	2007-11-17
Authors:	Oviedo, Pedro Marcelo
Institutions:	Iowa State University of Science and Technology <Ames, Iowa> / Department of Economics
Subject:	Nachhaltigkeit \| Fiskalpolitik \| Bruttoinlandsprodukt \| Öffentliche Schulden \| Government Debt

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Extent:	130048 bytes 9 p. application/pdf
Series:	IOWA State University - Department of Economics - Working Papers Working Paper # 06040
Type of publication:	Book / Working Paper
Language:	English
Classification:	E62 - Fiscal Policy; Public Expenditures, Investment, and Finance; Taxation ; F34 - International Lending and Debt Problems ; F37 - International Finance Forecasting and Simulation ; H63 - Debt; Debt Management ; Financial theory ; Management of financial services: stock exchange and bank management science (including saving banks) ; Individual Working Papers, Preprints ; No country specification
Source:	USB Cologne (business full texts)

Persistent link: https://www.econbiz.de/10009360837