This paper assesses the long-run optimal level of public debt in a framework where aggregate fluctuations are taken into account. Households are subject to both aggregate and idiosyncratic shocks and the market structure prevents them from perfectly insuring against risk. We find that the...

This paper relies on the 'institutional debt rule' implemented in Franc Zone countries to assess whether the structural vulnerability of these countries matter for their probability to enter into excessive indebtedness. This structural vulnerability is measured by retrospective 'Economic...

In this study, we examine the effect of structural economic vulnerability of developing countries on their public indebtedness. We perform our econometric analysis by relying on 96 developing countries over the period 1980-2008. The results suggest evidence of a "U-shaped" relationship between...

This paper argues that in Euro-area economies, where the ECB cannot bail-out …nancially distressed governments, the …scal multiplier is adversely affected by the amount of public debt. A regression model on a panel of 26 EU countries over the period 1996-2011 shows that a 10 percentage point...

Barro's model is an AK model, and there cannot be dynamic inefficiency since the social yield of the capital is higher than the growth rate. But it may be that the private yield and thus the interest rate are lower than the growth rate. One can thus have a Ponzi game and the government can allow...

This paper proposes a conceptual framework to identify the potential sources of contagion in emerging bond markets and the mechanisms through which shocks originating in a particular emerging or mature market are likely to be transmitted across countries and markets. We then apply this framework...