Political economy of government solvency: the institutional framework for stability and sustainability

Andrea Rieck and Ludger Schuknecht

Chapter 5 in Debt Default and Democracy, 2018, pp 65-83 from Edward Elgar Publishing

Abstract: Unhealthy and potentially unsustainable debt dynamics have been affecting advanced as well as developing economies. In this chapter we take stock of government obligations and private debt that could migrate to public balance sheets. We analyse different approaches to dealing with debt overhangs which have been pursued at various times. Building on past experiences, we discuss institutional mechanisms to achieve and preserve debt sustainability. Strong rules and institutions, clear accountability and credible enforcement procedures are essential to regain fiscal discipline and avert a potential future systemic fiscal crisis. We reject implicit or outright default as an acceptable way out of debt. Instead, we advocate strengthening national and international institutional underpinnings in order to ensure that contracting parties are able and willing to serve the commitments they have made.

Keywords: Economics and Finance (search for similar items in EconPapers)
Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.elgaronline.com/view/edcoll/9781788117920/9781788117920.00014.xml (application/pdf)
Our link check indicates that this URL is bad, the error code is: 503 Service Temporarily Unavailable

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:elg:eechap:18261_5

Ordering information: This item can be ordered from
http://www.e-elgar.com

Access Statistics for this chapter

More chapters in Chapters from Edward Elgar Publishing
Bibliographic data for series maintained by Darrel McCalla ().