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Paolo Canofari, Alessandro Piergallini and Giovanni Piersanti
''Assessing sovereign debt sustainability using a wealth-based fiscal indicator''
( 2020, Vol. 40 No.4 )
Working in the context of an endogenous growth model with the public sector, we show that forward-looking agents' optimizing behavior typically gives rise to a wealth-based, rather than to an output-based, sustainability index of government policy. New insights emerge from calibrating the index to European countries along with the U.S. and Japan as reference countries.
Keywords: Endogenous Growth, Sovereign Debt Sustainability, Debt-to-Wealth Ratio, Fiscal Indicators.
JEL: E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General
H6 - National Budget, Deficit, and Debt: General
Manuscript Received : Jun 10 2020 Manuscript Accepted : Oct 12 2020

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