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Public Debt Sustainability in Europe and Leading Countries

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  • Bodo Herzog
  • Larissa Dausch

Abstract

We investigate public debt sustainability in Europe and leading industrialised countries. The recent debate about the debt ceiling in the US and the sovereign debt crisis in Europe demonstrate the urgency of the topic. We measure debt sustainability of public finance with a standard and alternative methodology and compare both results. We use panel data of 205 OECD countries from 1970 to 2014. The paper finds unsustainable public debt levels for almost all countries in the past decades. Furthermore, given the low economic growth and demographic challenge ahead, debt levels may upsurge even more. There is a huge looming ‘debt meltdown’ on the horizon if countries do not change public policy soon.

Suggested Citation

  • Bodo Herzog & Larissa Dausch, 2015. "Public Debt Sustainability in Europe and Leading Countries," Journal of Empirical Economics, Research Academy of Social Sciences, vol. 4(4), pages 207-215.
    • Handle: RePEc:rss:jnljee:v4i4p2
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    References listed on IDEAS

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