Sustainability of Public Debt

Alfred Greiner and Bettina Fincke ()
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Bettina Fincke: Bielefeld University

Chapter Chapter 2 in Public Debt and Economic Growth, 2009, pp 5-69 from Springer

Abstract: Abstract This chapter derives conditions that characterize a sustainable path of public debt and points out the relationship between the primary surplus and a change in public that make a given path of public debt sustainable. Further, it is shown that a positive reaction of the primary surplus to higher debt does not guarantee that public debt relative to GDP remains bounded that, however, is necessary for sustainability in the long-run. Therefore, in case of rising debt to GDP ratios additional tests should be resorted to in order to detect whether a given debt policy is sustainable. The chapter, then, applies the proposed tests to both developed and developing countries.

Keywords: Euro Area; Real Interest Rate; Public Debt; Debt Ratio; Interest Payment (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:spr:dymchp:978-3-642-01745-2_2

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DOI: 10.1007/978-3-642-01745-2_2

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