The Debt Burden and Debt Maturity

34 Pages Posted: 6 Jul 2004 Last revised: 13 Apr 2022

See all articles by Alessandro Missale

Alessandro Missale

University of Milan - Department of Business Policy and Economics

Olivier J. Blanchard

National Bureau of Economic Research (NBER); Peterson Institute for International Economics

Date Written: December 1991

Abstract

At low and moderate levels of government debt, there appears to be little relation between the level of debt and its maturity. But at high levels of debt, a strong inverse relation emerges. We start the paper by documenting this inverse relation for those OECD Countries which have reached very high levels of debt. We then provide a theory of the joint movements of debt and maturity which can explain both sets of facts. It is based on the idea that, at high levels of debt, the government may need to decrease the maturity of the debt as debt increases, in order to maintain the credibility of its anti-inflation stance.

Suggested Citation

Missale, Alessandro and Blanchard, Olivier J. and Blanchard, Olivier J., The Debt Burden and Debt Maturity (December 1991). NBER Working Paper No. w3944, Available at SSRN: https://ssrn.com/abstract=392981

Alessandro Missale

University of Milan - Department of Business Policy and Economics ( email )

Via Conservatorio 7
I-20122 Milano
Italy

Olivier J. Blanchard (Contact Author)

Peterson Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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