Sovereign Debt Sustainability and Central Bank Credibility

Tim Willems and Jeromin Zettelmeyer ()
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Jeromin Zettelmeyer: Bruegel, Brussels, Belgium

Annual Review of Financial Economics, 2022, vol. 14, issue 1, 75-93

Abstract: This article surveys the literature on sovereign debt sustainability from its origins in the mid-1980s to the present and focuses on four debates. First, we evaluate the shift from an accounting-based view of debt sustainability using government borrowing rates to a model-based view that uses stochastic discount rates. Second, we review empirical tests, focusing on the relationship between primary balances and debt. Third, we discuss debt sustainability in the presence of rollover risk. And fourth, we evaluate whether government borrowing costs below rates of growth (r

Keywords: central bank credibility; debt crises; debt sustainability; fiscal policy; fiscal-monetary interactions; sovereign debt (search for similar items in EconPapers)
JEL-codes: E58 E63 H63 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (10)

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Working Paper: Sovereign Debt Sustainability and Central Bank Credibility (2022)
Working Paper: Sovereign Debt Sustainability and Central Bank Credibility (2021)
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DOI: 10.1146/annurev-financial-112921-110812

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