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Public Debt Sustainability and Alternative Theories of Interest

Posted: 3 May 2010  

T. Aspromourgos

The University of Sydney - Discipline of Economics

Daniel Rees

affiliation not provided to SSRN

Graham White

The University of Sydney - School of Social and Political Sciences

Date Written: 2010

Abstract

This paper reappraises sustainable trajectories of public debt and fiscal balance, with particular reference to the possible relations between the interest rate on debt and the growth rate of the economy. From the standpoint of the approach to the theory of interest proposed by Keynes-and, in a certain sense, also by Sraffa-the analysis opens up the possibility of sustaining permanent primary budget deficits. However, the extent to which this standpoint enables one to revise the spectrum of feasible empirical magnitudes for sustainable fiscal balances appears rather modest.

Keywords: Sustainable fiscal balance, Keynes, Sraffa

JEL Classification: E43, E58, E63, H63

Suggested Citation

Aspromourgos , T. and Rees, Daniel and White, Graham, Public Debt Sustainability and Alternative Theories of Interest (2010). Cambridge Journal of Economics, Vol. 34, Issue 3, pp. 433-447, 2010. Available at SSRN: https://ssrn.com/abstract=1599045 or http://dx.doi.org/10.1093/cje/bep010

Tony Aspromourgos (Contact Author)

The University of Sydney - Discipline of Economics ( email )

P.O. Box H58
Australia Square
Sydney, NSW 2006
Australia

Daniel Rees

affiliation not provided to SSRN

Graham White

The University of Sydney - School of Social and Political Sciences ( email )

Room 140, level 1,
RC Mills Building A26
Sydney, New South Wales NSW 2006
Australia

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