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Sovereign debt composition and time-varying public finance sustainability

Antonio Afonso and Joao Jalles ()

The North American Journal of Economics and Finance, 2017, vol. 42, issue C, 144-155

Abstract: We compute time-varying responses of the sovereign debt ratio to primary budget balances for 13 advanced economies between 1980 and 2012, and assess how fiscal sustainability reacts to different characteristics of government debt. We find that the sustainability time-varying coefficient increases and countries become more fiscally sustainable if they contract a higher share of long-term public debt, if more debt is held by the central bank or if it is easily marketable in capital markets.

Keywords: Sovereign debt; Fiscal sustainability; TIME-varying coefficients; Debt composition (search for similar items in EconPapers)
JEL-codes: C23 E62 F34 H63 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1016/j.najef.2017.07.008

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Handle: RePEc:eee:ecofin:v:42:y:2017:i:c:p:144-155