Sustainable debt and deficits in emerging markets

Goyal, Ashima (2010): Sustainable debt and deficits in emerging markets. Published in: International Journal of Trade and Global Markets , Vol. 4, No. 2 (May 2010): pp. 113-136.

Abstract

Rising deficits and high debt ratios characterized currency crises in countries with low private savings rates and low population densities. But in emerging markets with large population transferring to more productive employment, sustainable debts and deficits may be higher. Debt ratios fall with growth rates. Higher private savings can compensate for government dissaving. An optimizing model of such an economy with dualistic labour markets and two types of consumers demonstrates these features but also shows debt ratios tend to rise in high growth phases. Policy conclusions for fiscal consolidation and coordination with monetary policy are derived in the Indian context.

• Item Type: MPRA Paper
• Language: English
• Keywords: Deficits; Debt; Sustainability; Monetary-Fiscal Policy; Emerging Markets
• Subjects: E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy; D - Microeconomics > D9 - Intertemporal Choice > D90 - General; H - Public Economics > H6 - National Budget, Deficit, and Debt > H63 - Debt ; Debt Management ; Sovereign Debt

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