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- Publisher
- Springer Journals
- Copyright
- Copyright © 2018 by EEA
- Subject
- Economics; Economics, general; Economic Theory/Quantitative Economics/Mathematical Methods
- ISSN
- 0094-5056
- eISSN
- 1939-4632
- DOI
- 10.1057/s41302-018-0113-x
- Publisher site
- See Article on Publisher Site
Abstract
This paper provides an empirical framework for computing a flow measure of public debt called the debt-to-duration ratio. A ratio of this measure to GDP (DD-to-GDP) is a unit-free measure of debt burden interpreted as the percentage of income for debt service or repayment. Using monthly US Treasury data (1997–2018), we compare this measure to the debt-to-GDP ratio. The DD-to-GDP ratio is an alternative for use in discussions about sustainability of current levels of debt. An empirical test of the relationship between rising debt ratios and growth shows that duration has an important counteracting relationship with higher debt lowering growth but longer duration being associated with higher growth in the medium term.
Journal
Eastern Economic Journal – Springer Journals
Published: Sep 3, 2018