Running Primary Deficits Forever in a Dynamically Efficient Economy: Feasibility and Optimality

• 成果类型: Article
• 署名作者: Abel, Andrew B.; Panageas, Stavros
• 署名单位: University of Pennsylvania; University of California System; University of California Los Angeles
• 刊物名称: ECONOMETRICA
• ISSN/ISSBN: 0012-9682
• DOI: 10.3982/ECTA22749
• 发表日期: 2025
• 页码: 1601-1633
• 关键词: public debt; interest-rates; bubbles; GROWTH; overaccumulation; sustainability; accumulation; MODEL

摘要

Government debt can be rolled over forever without primary surpluses in some stochastic economies, including some economies that are dynamically efficient. In an overlapping-generations model with constant growth rate, g, of labor-augmenting productivity, and with shocks to the durability of capital, we show that along a balanced growth path, the maximum sustainable ratio of bonds to capital is attained when the risk-free interest rate, r f, equals g. Furthermore, this maximal ratio maximizes utility per capita along a balanced growth path and ensures that the economy is dynamically efficient.