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Sustainability of Public Debt in the United States and Japan

Author

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  • William R. Cline

    (Peterson Institute for International Economics)

Abstract

This paper applies the probabilistic debt sustainability model developed for the euro area in Cline (2012, 2014) to sovereign debt in the United States and Japan. The results indicate that to avoid further increases in the expected ratio of public debt to GDP over the next decade, average annual primary deficits will need to be reduced by about 0.75 percent of GDP in the United States and by about 3 percent of GDP in Japan from the likely baselines as of mid-2014.

Suggested Citation

  • William R. Cline, 2014. "Sustainability of Public Debt in the United States and Japan," Working Paper Series WP14-9, Peterson Institute for International Economics.
    • Handle: RePEc:iie:wpaper:wp14-9
    as

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    File URL: https://www.piie.com/publications/working-papers/sustainability-public-debt-united-states-and-japan
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    References listed on IDEAS

    as
    1. repec:cbo:report:418805 is not listed on IDEAS
    2. Congressional Budget Office, 2014. "Updated Budget Projections: 2014 to 2024," Reports 45229, Congressional Budget Office.
    3. Congressional Budget Office, 2010. "The Budget and Economic Outlook: Fiscal Years 2010 to 2020," Reports 41880, Congressional Budget Office.
    4. Congressional Budget Office, 2010. "The Budget and Economic Outlook: Fiscal Years 2010 to 2020," Reports 41880, Congressional Budget Office.
    5. Congressional Budget Office, 2013. "The 2013 Long-Term Budget Outlook," Reports 44521, Congressional Budget Office.
    6. Congressional Budget Office, 2014. "Updated Budget Projections: 2014 to 2024," Reports 45229, Congressional Budget Office.
    7. repec:cbo:report:418806 is not listed on IDEAS
    8. Congressional Budget Office, 2010. "The Budget and Economic Outlook: Fiscal Years 2010 to 2020," Reports 41880, Congressional Budget Office.
    9. International Monetary Fund, 2013. "Japan: 2013 Article IV Consultation," IMF Staff Country Reports 2013/253, International Monetary Fund.
    10. Congressional Budget Office, 2010. "The Budget and Economic Outlook: Fiscal Years 2010 to 2020," Reports 41880, Congressional Budget Office.
    11. repec:cbo:report:418807 is not listed on IDEAS
    12. repec:cbo:report:418804 is not listed on IDEAS
    13. William R. Cline, 2003. "Restoring economic growth in Argentina," Policy Research Working Paper Series 3158, The World Bank.
    14. Congressional Budget Office, 2010. "The Budget and Economic Outlook: Fiscal Years 2010 to 2020," Reports 41880, Congressional Budget Office.
    15. William R. Cline, 2012. "Sovereign Debt Sustainability in Italy and Spain: A Probabilistic Approach," Working Paper Series WP12-12, Peterson Institute for International Economics.
    16. William R. Cline, 2014. "Managing the Euro Area Debt Crisis," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 6871, April.
    17. Congressional Budget Office, 2014. "Updated Budget Projections: 2014 to 2024," Reports 45229, Congressional Budget Office.
    18. Congressional Budget Office, 2013. "The 2013 Long-Term Budget Outlook," Reports 44521, Congressional Budget Office.
    19. Congressional Budget Office, 2014. "Updated Budget Projections: 2014 to 2024," Reports 45229, Congressional Budget Office.
    20. Congressional Budget Office, 2013. "The 2013 Long-Term Budget Outlook," Reports 44521, Congressional Budget Office.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. John Creedy & Grant Scobie, 2017. "Debt projections and fiscal sustainability with feedback effects," New Zealand Economic Papers, Taylor & Francis Journals, vol. 51(3), pages 237-261, September.
    2. William R. Cline, 2015. "Too Much Finance, or Statistical Illusion?," Policy Briefs PB15-9, Peterson Institute for International Economics.
    3. John Creedy & Grant Scobie, 2017. "Debt projections and fiscal sustainability with feedback effects," New Zealand Economic Papers, Taylor & Francis Journals, vol. 51(3), pages 237-261, September.

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    More about this item

    Keywords

    Public Debt; United States; Japan; Debt Sustainability; Deficits;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt

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