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Sustainability and Optimality of Public Debt

  • Book
  • © 2013

Overview

Authors:
  1. Michael Carlberg

    1. , Department od Economics, Helmut Schmidt University, Hamburg, Germany

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    You can also search for this author in PubMed   Google Scholar

  2. Arne Hansen

    1. , Department of Economics, Helmut Schmidt University, Hamburg, Germany

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    You can also search for this author in PubMed   Google Scholar

  • Numerous illustrations and examples help the reader to understand and proceed quickly
  • The investigation covers the closed economy, the small open economy and a two-country setting
  • The analysis includes the Solow model, the overlapping generations model and the infinite horizon model

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Table of contents (11 chapters)

  1. Front Matter

    Pages I-XII
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  2. Introduction

    • Michael Carlberg, Arne Hansen
    Pages 3-4

  3. A Brief Survey of the Literature

    • Michael Carlberg, Arne Hansen
    Pages 5-7

  4. The Closed Economy

    1. Front Matter

      Pages 9-9
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    2. The Solow Model

      • Michael Carlberg, Arne Hansen
      Pages 11-76

    3. Overlapping Generations

      • Michael Carlberg, Arne Hansen
      Pages 77-103

    4. Infinite Horizon

      • Michael Carlberg, Arne Hansen
      Pages 104-130

  5. The Small Open Economy

    1. Front Matter

      Pages 131-131
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    2. The Solow Model

      • Michael Carlberg, Arne Hansen
      Pages 133-150

    3. Overlapping Generations

      • Michael Carlberg, Arne Hansen
      Pages 151-160

  6. Two Countries

    1. Front Matter

      Pages 161-161
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    2. The Solow Model

      • Michael Carlberg, Arne Hansen
      Pages 163-178

    3. Synopsis

      • Michael Carlberg, Arne Hansen
      Pages 179-185

    4. Conclusion

      • Michael Carlberg, Arne Hansen
      Pages 187-196

    5. Result

      • Michael Carlberg, Arne Hansen
      Pages 197-198

  7. Back Matter

    Pages 199-212
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Keywords

About this book

This book studies the sustainability and optimality of public debt under different scenarios: the closed economy, the small open economy, and a two-country setting. Sustainability refers to the existence and the stability of the long-run equilibrium. Optimality relates to the path of public debt that maximizes discounted utility. The analysis is conducted within the framework of the Solow model, the overlapping generations model and the infinite horizon model. The government can follow different strategies, it either fixes the deficit ratio or the tax rate. As a result, a fixed deficit ratio generally can be sustained. By contrast, a fixed tax rate generally cannot be sustained. Depending on the chosen fiscal strategy, there exists either an optimal deficit ratio or an optimal tax rate that maximizes the sum of consumption and government purchases per capita.

Authors and Affiliations

  • , Department od Economics, Helmut Schmidt University, Hamburg, Germany

    Michael Carlberg

  • , Department of Economics, Helmut Schmidt University, Hamburg, Germany

    Arne Hansen

About the authors

Michael Carlberg is Professor at Helmut Schmidt University in Hamburg, Germany. His research is on Macroeconomics, Monetary Economics, and International Economics.

Arne Hansen is research assistant at Helmut Schmidt University in Hamburg, Germany. His research is on Economic Growth, Public Debt, and International Economics.

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