Sustainability of Public Debt and Inequality in a General Equilibrium Model

Maebayashi, Noritaka; Konishi, Kunihiko

doi:10.1017/s1365100519000336

Cited by 15 publications

(10 citation statements)

References 56 publications

(82 reference statements)

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“…The study found that non-Latin American economies are considered resilient in the short term, as their debt remains below thresholds of 40%-55% of GDP, while financial resilience is a much more challenging task for most Latin American economies due to their debt accumulation above the threshold, representing about 35% of GDP, which is relatively lower than projected for other countries (Tran, 2018). Maebayashi and Konishi (2019) examined the relationship between public debt sustainability and inequality in an endogenous growth model with heterogeneous agents, and the impact of fiscal deficits and redistributive policies on public debt sustainability and inequality. The researchers concluded that the threshold for public debt sustainability is related not only to the relative size of public debt but also to inequality.…”

Section: Literature Reviewmentioning

confidence: 93%

“…Maebayashi and Konishi (2019) examined the relationship between public debt sustainability and inequality in an endogenous growth model with heterogeneous agents, and the impact of fiscal deficits and redistributive policies on public debt sustainability and inequality. The researchers concluded that the threshold for public debt sustainability is related not only to the relative size of public debt but also to inequality.…”

Section: Literature Reviewmentioning

confidence: 99%

“…In addition, an increase in the deficit ratio or redistribution tax makes government debt less resilient. In case the economy becomes volatile as a result of policy changes, public debt and inequality will continue to rise (Maebayashi and Konishi, 2019).…”

Section: Literature Reviewmentioning

confidence: 99%

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Formation and management of public debt sustainability on the example of the Republic of Kazakhstan and the Russian Federation

Mukhtarkhan

2021

IJOA

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Purpose The purpose of this paper is to study debt sustainability of countries with a resource-based economy on the example of the Republic of Kazakhstan and the Russian Federation. Design/methodology/approach Macroeconomic indicators and data on external and internal public debt of the Republic of Kazakhstan and the Russian Federation for the period from 2007 to 2019 were analyzed using quantitative, qualitative, comparative, descriptive and graphical methods. Based on the collected data, the indicators were calculated, analyzed and compared, taking into account the threshold values, using The Debt Sustainability Framework for Low-Income Countries of the International Monetary Fund and the World Bank. Findings The results of the study showed that the indicators of the public debt of both the Republic of Kazakhstan and the Russian Federation, during the period covered by the study, were in the zone of reduced risk and were stable. In addition, the study revealed a slight shift in the structure of the public debt of the Republic of Kazakhstan toward a decrease in the share of domestic borrowing (from 67% to 55%), whereas in the structure of the Russian public debt, the share of domestic borrowing increased significantly (from 52% to 74%). Originality/value The results of this study can be applied by scientists to analyze the sustainability of public debt in various countries and regions, as well as by officials to determine the fiscal and budgetary policies of the Republic of Kazakhstan and the Russian Federation, as well as other states.

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Section: Literature Reviewmentioning

confidence: 93%

Section: Literature Reviewmentioning

confidence: 99%

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Formation and management of public debt sustainability on the example of the Republic of Kazakhstan and the Russian Federation

Mukhtarkhan

2021

IJOA

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“…The above studies suggest that the government should conduct fiscal policy from a long-run perspective. 1 However, except for Borissov and Kalk [ 10 ] and Maebayashi and Konishi [ 23 ], few theoretical studies have examined the effects of public debt on income inequality. In recent years, empirical studies have reported a positive correlation between income inequality and public debt (e.g., Azzimonti et al [ 2 ]; Bartak et al [ 5 ]; Luo [ 22 ]).…”

Section: Introductionmentioning

confidence: 99%

Public debt and income inequality in an endogenous growth model with elastic labor supply

Miyashita

2023

IJEPS

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In this study, we examine the relationships among long-run public debt policy, economic growth, and income inequality by extending a representative consumer theory of distribution and using an endogenous growth model with a sustainable fiscal rule, elastic labor supply, and initial endowment of heterogeneous wealth. We show that fiscal policy with strict (loose) budgetary discipline decreases (increases) the economic growth rate in the short run. In contrast, it increases (decreases) the economic growth rate in the long run. Then, we show that fiscal policy with strict (loose) budgetary discipline decreases (increases) income inequality in both the short and long run. First, we show that a balanced growth path is a locally stable saddle point. Then, we consider the relationships among public debt, the economic growth rate, and income inequality. In this model, the average leisure and the public-debt-to-private-capital ratio determine the rate of return and wage rate, affecting both the economic growth rate and income distribution across agents. We conclude that there is a negative relation between the economic growth rate and the measure of income inequality in the long run by conducting numerical simulations using US data. The policy implication of this paper is that the government has a public debt policy that achieves both faster economic growth and the improvement of income inequality. Supplementary Information The online version contains supplementary material available at 10.1007/s42495-023-00106-y.

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“…IMF [27] describes debt sustainability as the need to satisfy solvency condition without subject to correction or additional cost of financing. To further highlight the importance of debt sustainability, some studies claimed that such solvency condition must ensure that public debt plus the discount value of entirely government spending does not exceed the present value of generated revenues of non-interest spending [14,32].…”

Section: Introductionmentioning

confidence: 99%

Debt sustainability and the fiscal reaction function: evidence from MIST countries

Ogbeifun

Shobande

2020

Futur Bus J

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The use of public debt is not new in financing developmental objectives. A significant challenge arose when it became obvious that the indebted countries could not fulfill its existing financial obligation to the rest of the world where debt is sourced. For a panel of 4 heterogeneous countries from 1990 to 2017, we study governments’ reactions to debt accumulation and the corrective measures taken when its borrowings result in a rise in debt–GDP ratio. The study evidence is based on the fixed effect and the feasible generalized least squares estimators. We find evidence that primary balance improves by about 0.005–0.013 for every 1 percentage point increase in central government debt after controlling for other relevant factors. The results further suggest that the accrued interest payments on debt reflect the effective debt management policies across the countries, whereas the activities on the current account balance impose a possible threat to the primary balance. The study calls for policies that increase fiscal bases through the reduction in fiscal expenditure and the reinforcement of tax base revenue across the MIST countries.

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Sustainability of Public Debt and Inequality in a General Equilibrium Model

Cited by 15 publications

References 56 publications

Formation and management of public debt sustainability on the example of the Republic of Kazakhstan and the Russian Federation

Formation and management of public debt sustainability on the example of the Republic of Kazakhstan and the Russian Federation

Public debt and income inequality in an endogenous growth model with elastic labor supply

Debt sustainability and the fiscal reaction function: evidence from MIST countries

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