G2TT
来源类型Discussion paper
规范类型论文
来源IDDP16687
DP16687 The Debt Capacity of a Government
Bernard Dumas; Chunyu Yang
发表日期2021-11-02
出版年2021
语种英语
摘要In a deterministic overlapping-generations economy with production and physical capital, the price of debt can be positive without any budget surpluses being in the offing, because debt incorporates a rational bubble. Yet the dynamics of debt remain a function of the dynamics of the primary budget deficit. As a way to study their joint behavior, we endogenize a structural deficit in the form of an underfunded social-security scheme. We define debt capacity as the level of debt that can be just sustained without a change of policy all the way to an unstable steady state. When it starts below the capacity, the debt converges to a stable steady state, in which the bubble is sustained. Above capacity the bubble unravels and the deficit cannot be financed. In several realistic scenarios occurring in economies, we calculate the needed policy response, which is the true "fiscal cost" of exceeding debt capacity.
主题Financial Economics
关键词Debt capacity Fiscal policy Asset market bubbles Social security sustainability
URLhttps://cepr.org/publications/dp16687
来源智库Centre for Economic Policy Research (United Kingdom)
资源类型智库出版物
条目标识符http://119.78.100.153/handle/2XGU8XDN/545623
推荐引用方式
GB/T 7714
Bernard Dumas,Chunyu Yang. DP16687 The Debt Capacity of a Government. 2021.
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