Abstract This paper discusses recent debt trends and evaluates performance of sustainability analysis (DSA) conducted in a sample Sub-Saharan African (SSA) countries over the period 2008–16. Based on qualitative quantitative analyses, findings suggest existence systematic optimism bias past DSA vintages resulting from optimistic macro-economic projections that underpin DSAs. As result, DSAs for...

In a passive monetary and active fiscal policy regime, changes in the value of public debt generate wealth effects on households. Then, in contrast to the active monetary and passive fiscal policy regime, inflation moves oppositely from the inflation target and a stronger reaction of interest rates to inflation increases the response of inflation to shocks. Moreover, a higher level of public de...

The debt maturity of U.S. industrial firms decreased over the past three decades. This decrease in maturity is driven by the smallest firms for which the median percentage of long-term debt has decreased from 53% in 1976 to 6% in 2008. For large firms, however, debt maturity has not declined. Information asymmetry plays an important role in explaining the decrease in debt maturity, while debt a...

We use a dynamic game model of a two-country monetary union to study the impacts of an exogenous fall in aggregate demand, the resulting increase in public debt, and the consequences of a sovereign debt “haircut” for a member country or bloc of the union. In this union, the governments of participating countries pursue national goals when deciding on fiscal policies, while the common central ba...

I propose a simple model with complete and perfect information that analyzes the relation between managerial incentive compensation and the firm’s choice between public and bank debt. My analysis of firm-level data over the period 1992-2005 offers considerable support to the predictions of the model. I find a positive relation between the level of incentive compensation and the preference for b...

The aim of this paper is to study the relationship between the shadow economy and corruption as determinants of public debt in the Spanish Autonomous Communities. In addition, we construct a Corruption Perception Index for those regions. Our data constitute panel data for the period 2000–2012. The results show that the volume of the shadow economy has a significant and positive impact on region...

The paper examines the interrelationship between fiscal and monetary policy in a two-country monetary union. The worst scenario occurs when an independent central bank (CB) sets the nominal interest rate and responds to rising government debt/GDP ratios by monetisation. The result is high inflation, high debt/GDP ratios and a large public sector. Government debt and inflation are contained if t...

In this paper we empirically study the relation between public debt and economic growth. We analyze how the public debt to GDP ratio at a certain point in time is correlated with the GDP growth rate in the following period, where we consider a one-year time span, a three-years time interval and a five-years interval. Using panel data comprising seven developed countries from 1970-2012, we estim...