In this paper we empirically explore the relationship between debt and output in a panel of 72 countries over the … predicted by a standard small open economy model by Aguiar and Gopinath (2007), where debt and output endogenously respond to … total factor productivity (TFP) shocks. First, developing countries' debt falls after a positive output shock, while the …

This paper investigates the international spillovers of government debt and the associated risk of inflation within a … can shift part of its long-term debt burden to the funded country. Moreover, the PAYG country gains from unexpected … with the level of debt in the PAYG country. Higher inflation risk harms both countries. Actually, in contrast to the debt …