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Public debt sustainability and alternative theories of interest

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  • Tony Aspromourgos
  • Daniel Rees
  • Graham White

Abstract

This paper reappraises sustainable trajectories of public debt and fiscal balance, with particular reference to the possible relations between the interest rate on debt and the growth rate of the economy. From the standpoint of the approach to the theory of interest proposed by Keynes--and, in a certain sense, also by Sraffa--the analysis opens up the possibility of sustaining permanent primary budget deficits. However, the extent to which this standpoint enables one to revise the spectrum of feasible empirical magnitudes for sustainable fiscal balances appears rather modest. Copyright The Author 2009. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved., Oxford University Press.

Suggested Citation

  • Tony Aspromourgos & Daniel Rees & Graham White, 2010. "Public debt sustainability and alternative theories of interest," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 34(3), pages 433-447.
    • Handle: RePEc:oup:cambje:v:34:y:2010:i:3:p:433-447
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    File URL: http://hdl.handle.net/10.1093/cje/bep010
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    Cited by:

    1. J.W. Mason & Arjun Jayadev, 2015. "Lost in Fiscal Space: Some Simple Analytics of Macroeconomic Policy in the Spirit of Tinbergen, Wicksell and Lerner," Working Papers 2015_05, University of Massachusetts Boston, Economics Department.
    2. Smith, Matthew, 2018. "Demand-Led Growth Theory in a Classical Framework: Its Superiority, Its Limitations, and Its Explanatory Power," Centro Sraffa Working Papers CSWP29, Centro di Ricerche e Documentazione "Piero Sraffa".
    3. N. Bilkic & B. Carreras Painter & T. Gries, 2013. "Unsustainable sovereign debt—is the Euro crisis only the tip of the iceberg?," International Economics and Economic Policy, Springer, vol. 10(1), pages 1-45, March.
    4. Summa, Ricardo de Figueiredo, 2022. "Alternative uses of functional finance: Lerner, MMT and the Sraffiansh," IPE Working Papers 175/2021, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    5. Cao, Hongjie & Li, Meina & Lu, Yuqi & Xu, Yang, 2022. "The impact of strengthening government auditing supervision on fiscal sustainability: Evidence from China's auditing vertical management reform," Finance Research Letters, Elsevier, vol. 47(PB).
    6. Ernesto del Castillo & René Cabral & Eduardo Saucedo, 2022. "The Sustainability of Mexican Municipal Public Debt," Sustainability, MDPI, vol. 14(11), pages 1-14, May.
    7. Eric Tymoigne, 2020. "Monetary Sovereignty: Nature, Implementation, and Implications," Public Budgeting & Finance, Wiley Blackwell, vol. 40(3), pages 49-71, September.

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