Sovereign Debt Sustainability and Central Bank Credibility

Jeromin Zettelmeyer and Tim Willems

No 16817, CEPR Discussion Papers from Centre for Economic Policy Research

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

Keywords: Sovereign debt; Debt sustainability; Fiscal policy; Debt crises; Fiscal-monetary interactions; Central bank credibility (search for similar items in EconPapers)
JEL-codes: E52 E58 E62 H62 H63 (search for similar items in EconPapers)
Date: 2021-12
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Journal Article: Sovereign Debt Sustainability and Central Bank Credibility (2022)
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