Public debt in the 21st century

Xavier Timbeau, Elliot Aurissergues () and Eric Heyer
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Elliot Aurissergues: OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po

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Abstract: We propose a definition of public debt sustainability based on the possibility of conducting a fiscal effort or giving support to a macroeconomic path that makes it possible to reach a public debt target over a given horizon. The concepts of a fiscal effort and a macroeconomic trajectory are both speculative, as they rely on the anticipation of unknown futures. By making the parameters of these futures explicit and using them in a parsimonious model, we can generate trajectories that are not forecasts but a means of assessing the effort required to reach a targetthat is conditional on explicit assumptions. Debtwatch is a web applicatio n, freely accessible at https://ofce.shinyapps.io/debtwatchr, that can be used to carry out simulations, not only for France but also for other European countries and certain non-European countries such as the United States, including by modifying the parameters and exchanging assumptions with others. It is possible to carry out a calculation that is transparent (the assumptions are known and can be shared) an d reproducible (the sa me assumptions lead to the same results) and which shouldhelp to further the debate on public debt targets and the associated efforts for a selection of developed countries.

Keywords: public debt; Debtwatch; simulations; calculation; developed countries (search for similar items in EconPapers)
Date: 2021-10-22
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Published in OFCE Policy Brief, 2021, 96, pp.1-18

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Working Paper: Public debt in the 21st century (2021)
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