In this article we analyse the problem of public debt-to-GDP stability in the Eurozone within the framework provided by Domar (1944) and Pasinetti (1997) We suggest that a feasible solution might be the realization of a market-financed, growth-enhancing investment programme, which would be particularly welcome because of the positive short- and long-term repercussions it would have on GDP growth and the stabilising effects on interest rates. Some simulations allow us to quantify these effects. The consequences of the COVID-19 pandemic further reinforce our policy implications in terms of public debt sustainability.
In this paper, we analyze the problem of public debt-to-GDP stability in the Eurozone. We suggest that a feasible solution might be the realization of a market-financed, growth-enhancing investment program, which would be particularly welcome because of the positive short- and long-term repercussions it would have on GDP growth and the stabilizing effects on interest rates. Some simulations allow us to quantify these effects. The consequences of the COVID-19 pandemic further reinforce our policy implications in terms of public debt sustainability.
A market-financed and growth-enhancing investment plan for the euro area
Della Posta P.
;
2020-01-01
Abstract
In this paper, we analyze the problem of public debt-to-GDP stability in the Eurozone. We suggest that a feasible solution might be the realization of a market-financed, growth-enhancing investment program, which would be particularly welcome because of the positive short- and long-term repercussions it would have on GDP growth and the stabilizing effects on interest rates. Some simulations allow us to quantify these effects. The consequences of the COVID-19 pandemic further reinforce our policy implications in terms of public debt sustainability.| File | Dimensione | Formato | |
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Investment plan - Della Posta et al.pdf
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