We develop a simple two-period principal-agent model in which a present-biased government, the agent, chooses public investment levels given a deficit rule imposed by the principal. The principal sets a deficit cap to curb current debt-financed consumption. In doing so, it also reduces long-term...

Concerns about fiscal sustainability and worsening balance sheet conditions of major banks triggered a doom loop between banks and sovereigns during the 2010-2013 sovereign debt crisis. Despite closer financial integration and additional institutional safeguards, the home bias, i.e. domestic...

Economic growth in the advanced economies (AEs) has been slowing down since the early 2000s, while government debt ratios have been rising. The recent surge in debt at the onset of the Covid-19 pandemic has further intensified concerns about these phenomena. This paper aims to offer insight into...

This study theorizes the relationship between sovereign debt and income inequality and shows that increases in public indebtedness are robustly associated with increases in the income share of the top one percent in the US since the 1960s. First, the paper outlines the mechanisms through which...

In recent years, because of the 2008 financial crisis and the evolution of the sovereign debt markets, there has been a significant increase in interest in understanding the factors that determine the risk premium, becoming a key indicator of the financial stability of countries, and a measure...

In the early 2020s sharp surge of inflation, unprecedentedly high levels of government debt and deficits fueled attention for the Fiscal Theory of the Price Level (FTPL). This theoretical framework for fiscally induced inflation is well-known and controversially discussed. However, empirical...

This article consists of a systematic analysis of a large sample of the first purchasers of annuities issued by the urban governments of Catalonia between the years 1313 and 1367. Based on preliminary literature on the subject, it gathers, describes, and contextualizes, both from the point of...

This special issue focuses on the financial behaviour of different participants in European medieval and early modern financial markets. It extends our knowledge of the financial strategies employed by households, merchants, charities, city governments and corporations by asking what investment...

ypical debt sustainability metrics characterize Kenya's sovereign debt as "unsustainable" since around 2019. Further, the data show that, over time, commercial banks' private sector lending has declined while lending to the government has grown. Given these observations, this study examines...

This study explores perceptions of public debt management among Debt Management Offices (DMOs) in low- and middle-income countries. Based on a survey conducted in October 2023 covering 27 countries, it examines DMOs' views on the relationship between public debt and economic growth, the...

In the official models for projections and policy analysis used by the Treasury and the Social Security and Medicare Trustees, many key variables are assumed as a continuation of past trends. Even the Congressional Budget Office (CBO), with more sophisticated models, makes certain simplifying...

The Social Security "full retirement age" (FRA) is the age at which retirement income benefits are available without reduction for early commencement. Presently, that age is 67 for those born in 1960 or later. This paper is about the unfair and unnecessary threat to reduce Social Security...

Western media and academia have heralded the China collapse narrative. This paper provides a critical and balanced examination of the four challenges facing the Chinese economy - namely, deflation, debt, demographics, and de-coupling/de-risking. It argues that while deflationary pressure is...

The era of debt, in the context of the Industrial Revolution 4.0, imposes the need to investigate how improvements in public and private debt can be achieved. This paper analyses the impact of the new technologies and political-economic systems on the economy reflected through the public debt of...

The European Union has reformed its fiscal rules in late 2024, making debt sustainability analysis (DSAs) the central steering tool for European fiscal policy. DSAs will be used to project debt-to-GDP ratios and derive fiscal policy requirements. In this paper, we show that DSAs currently...

This paper provides a novel way for instructors to teach about the perils of a large National Debt, which is currently $36 trillion. We provide a detailed lesson plan that utilizes balloons to illustrate the possible paths a society can take to address this issue. The lesson plan consists of an...

Die aktuelle Schuldenbremse verhindert notwendige Zukunftsinvestitionen. Dieser Beitrag enthält einen pragmatischen Änderungsvorschlag des Artikel 109 Abs. 3 GG, der im Kern für einen Übergang von der kameralen Betrachtung der Einnahmen und Ausgaben zur kaufmännischen Betrachtung als...

Die Koalitionssondierungen haben zu einer Einigung bei der Finanzierung von Infrastruktur und Rüstung geführt. Diese sieht vor, die Schuldengrenze im Grundgesetz bestehen zu lassen und sie zugleich mithilfe von kreditfinanzierten Sondervermögen bzw. Ausnahmeklauseln zu umgehen. Das wirft die...

ypical debt sustainability metrics characterize Kenya's sovereign debt as "unsustainable" since around 2019. Further, the data show that, over time, commercial banks' private sector lending has declined while lending to the government has grown. Given these observations, this study examines...

Theory suggests that corporate and sovereign bonds are fundamentally different, also because sovereign debt has no bankruptcy mechanism and is hard to enforce. We show empirically that the two assets are more similar than you think, at least when it comes to high-yield bonds over the past 20...