The issue of public debt sustainability is exceptional importance in the case Greece. As a rule, relevant analysis limited to examination fiscal policy measures reported contribute reducing leaving out investigation factors that caused country’s crisis. objective present paper explore determinants Greece’s crisis and strategy required address it. Our work highlights social development, which fo...

This paper explores the role of public debt and fiscal deficits on factor productivity in an economy with credit market frictions and heterogeneous firms. When credit market conditions are sufficiently weak, low interest rates permit the government to run Ponzi schemes so that permanent primary deficits can be sustained. For small enough deficit ratios, the model has two steady states of which ...

In his “Principles of Political Economy and Taxation” [9], Ricardo cautioned that the deficit-financing of public expenditures sets back the growth of capital. The reference was to economies with rapid adjustment to “full-employment” equilibrium. While the Keynesians denied the rapid-equilibration assumption, the postwar reevaluation of monetary policy led to a modern restatement of Ricardo’s d...

Does the current economic crisis require the deep cuts in public spending announced in the June 2010 emergency budget, with potential implications for public health? The arguments for and against such cuts in response to economic recession are complex, but if public health professionals are to engage in debates about future public spending, they should be informed by relevant evidence. In this ...

Does the current economic crisis require the deep cuts in public spending announced in the June 2010 emergency budget, with potential implications for public health? The arguments for and against such cuts in response to economic recession are complex, but if public health professionals are to engage in debates about future public spending, they should be informed by relevant evidence. In this ...

During the last three decades the stock of government debt has increased in most developed countries. During the same period international capital markets have been liberalized. In this paper we develop a two-country political economy model with incomplete markets and endogenous government borrowing and show that countries choose higher levels of public debt when financial markets are internati...

This paper studies optimal sovereign debt policy of the government with limited commitment and compare the optimal policies in economies with and without government’s private capital control. The comparison of optimal sovereign debt policies can rationalize why more financially open market economies show more severe allocation puzzle — more negative relationship between growth and public capita...

This paper studies optimal public debt in a dynastic model with human capital externalities that cause human capital investment (fertility) to be below (above) its socially optimal level. By reducing fertility and raising human capital investment, the optimal debt can exceed 10% of output for plausible parameterizations. r 2005 Elsevier B.V. All rights reserved. JEL classification: E60; H63; O41