Public Debt Sustainability Under Uncertainty: An Invariant Set Approach

March 13, 2017

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

The paper offers an approach to assessing the sustainability of public debt taking into account the effect of fiscal policy on output, as well as uncertainty in the model parameters and system dynamics. Uncertainty is specified in general terms, and the analysis is based on the notion of invariant sets. Examples are provided to illustrate how the method can be applied in practice.

Subject: Debt sustainability, Debt sustainability analysis, Fiscal stance, Output gap, Public debt

Keywords: debt ratio, potential GDP, WP

Pages:
28
Volume:
2017
DOI:
https://doi.org/10.5089/9781475586251.001
Issue:
057
Series:
Working Paper No. 2017/057
Stock No:
WPIEA2017057
ISBN:
9781475586251
ISSN:
1018-5941

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