deficits and debt. Economic arguments alone are not sufficient to explain this behavior. Therefore, recent political economy …

capital markets are integrated, the fiscal policy of one country influences equilibrium wages and interest rates. Under …

The prevailing view in the literature is that the cost of debt servicing depends on the variables that determine the … debt dynamics: primary balance, outstanding debt, economic growth and inflation. Several papers devoted to advanced market … economies show that a stronger primary balance is associated with a lower cost of debt servicing. The interest cost of servicing …

In this paper we test whether German public debt has been sustainable by resorting to a test proposed by Bohn (1998 …. Further, we find evidence that the response of the primary deficit is a U-shaped function of the debt ratio which first … declines and then rises after a certain threshold of the debt ratio is exceeded. …

, emphasizing the importance of efficient allocation of government expenditure to reproductive investment. Although the debt …

are Member States in the European Monetary Union (EMU) and underwent considerable increases in public debt in the early … 1990s. We focus on the question, how fiscal policy behaves under rising public debt ratios. It is found that both Germany … and Spain generally exhibit a positive relationship between government revenues and debt. Using Markov …

the budget deficit, (2) assess the sustainability of the public debt, and (3) reduce the risk of the debt becoming …