Debt sustainability in a low interest rate world

• 成果类型: Article
• 署名作者: Mehrotra, Neil R.; Sergeyev, Dmitriy
• 署名单位: United States Department of the Treasury; Bocconi University
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2021.09.001
• 发表日期: 2021
• 页码: S1-S18
• 关键词: public debt; Low interest rates

摘要

Historic levels of public debt and conditions of r < g for advanced economies have prompted a reassessment of debt sustainability. Using a continuous-time model in which the debt-to-GDP ratio is stochastic and r < g on average, we find that theoretical condi-tions for sustainability are not closely tied to common metrics of sustainability: the level of debt or whether r < g. However, when the primary surplus is bounded, a state-dependent threshold level of public debt determines sustainability. Secular stagnation factors like slow population growth, low productivity growth, or higher output risk carry differing implica-tions for debt sustainability. (c) 2021 Elsevier B.V. All rights reserved.