What Will It Take to Stabilise Debt in Advanced Countries?

Zsolt Darvas, Gonzalo Huertas, Lennard Welslau and Jeromin Zettelmeyer

No 20929, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper analyses the prospects for debt stabilisation in European Union countries, the United Kingdom, and the United States using stochastic debt sustainability analysis and estimated fiscal reaction functions. We find that (1) debt-stabilising primary balances are generally within historical precedent – well below 3 percent of GDP; (2) fiscal adjustment required to reach such balances is very high in several countries, including France, the United Kingdom and the United States; (3) the feedback coefficient from debt to the primary balance remains positive but has declined since the global financial crisis and lost statistical significance in most countries, implying that debt stabilisation is uncertain.

Keywords: Sovereign; debt (search for similar items in EconPapers)
JEL-codes: F34 H63 H68 (search for similar items in EconPapers)
Date: 2025-12
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP20929 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:20929

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP20929

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().