Alfred Greiner, Bettina Fincke "Public Debt and Economic Growth"
Springer | English | 2009-08-03 | ISBN: 3642017444 | 152 pages | PDF | 1,1 MB





Starting point of this book is the observation that an increase inpublic debt must be accompanied by a rise in the primary surplus of thegovernment to guarantee sustainability of public debt. The book firstelaborates on that principle from a theoretical point of view and thentests whether empirical evidence for that rule can be found. Additionaltests are implemented to gain further evidence on sustainability ofpublic debt. In order to allow for time varying coefficients penalizedspline estimations are performed. The theoretical chapters presentendogenous growth models and assume that the primary surplus rises aspublic debt increases so that sustainability of public debt is given.Implications of public deficits and debt are studied assuming fullemployment and for unemployment. The conclusion summarizes the findingsand compares the results of the different models. Finally, policyimplications are given showing how governments should deal with highpublic debt to GDP ratios.