In this paper we develop a simple analytical framework to analyze “good” and “bad equilibria” in public-debt and growth dynamics. The “bad equilibrium” is characterised by the simultaneous occurrence, and adverse feedbacks between, high and growing fiscal deficits and debt, high risk...

The global economic and financial crisis has sparked an unprecedentedly large, generalized fiscal policy response in practically all major industrial and emerging economies, which will change the fiscal and macroeconomic landscapes for some time to come. This paper offers an overview of the new...