Fluctuations macroéconomiques et dette publique

Audrey Desbonnet () and Sumudu Kankanamge
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Audrey Desbonnet: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: This paper considers the impact of macroeconomic fluctuations on the optimal level of public debt. Households are subject to both aggregate and idiosyncratic risk and insurance market imperfectness prevents them from from fully insuring against risk. We find that the optimal level of public debt is significantly higher in a setting embedding macroeconomic fluctuations than in a simpler idiosyncratic risk framework. Macroeconomic fluctuations modify both the cost and the motive for precautionary saving. Public debt by effectively reducing the cost of precautionary saving help agents to smooth consumption when they face price and employment fluctuations.

Keywords: Cycles économiques; épargne; Dettes publiques; marché du travail (search for similar items in EconPapers)
Date: 2008
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Published in Revue Economique, 2008, 59 (3), ⟨10.3917/reco.593.0583⟩

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Journal Article: Fluctuations macroéconomiques et dette publique (2008)
Working Paper: Fluctuations macroéconomiques et dette publique (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:hal-01745850

DOI: 10.3917/reco.593.0583

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