Sustainable debt and deficits in emerging markets

Ashima Goyal

MPRA Paper from University Library of Munich, Germany

Abstract: Rising deficits and high debt ratios characterized currency crises in countries with low private savings rates and low population densities. But in emerging markets with large population transferring to more productive employment, sustainable debts and deficits may be higher. Debt ratios fall with growth rates. Higher private savings can compensate for government dissaving. An optimizing model of such an economy with dualistic labour markets and two types of consumers demonstrates these features but also shows debt ratios tend to rise in high growth phases. Policy conclusions for fiscal consolidation and coordination with monetary policy are derived in the Indian context.

Keywords: Deficits; Debt; Sustainability; Monetary-Fiscal Policy; Emerging Markets (search for similar items in EconPapers)
JEL-codes: D90 E52 E62 H63 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (2)

Published in International Journal of Trade and Global Markets 2.4(2010): pp. 113-136

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Related works:
Journal Article: Sustainable debt and deficits in Emerging Markets (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:40100

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