Why Care About Debt-to-GDP?

Jonathan B. Berk and Jules van Binsbergen

No 34629, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We construct an international panel data set comprising three distinct yet plausible measures of government indebtedness: the debt-to-GDP, the interest-to-GDP, and the debt-to-equity ratios. Our analysis reveals that these measures yield differing conclusions about recent trends in government indebtedness. While the debt-to-GDP ratio has reached historically high levels, the other two indicators show either no clear trend or a declining pattern over recent decades. We argue for the development of stronger theoretical foundations for the measures employed in the literature, suggesting that, without such grounding, assertions about debt (un)sustainability may be premature.

JEL-codes: E40 E5 E60 E62 E69 H6 H60 H62 H63 (search for similar items in EconPapers)
Date: 2026-01
Note: IFM PE
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