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The limits of limitless debt

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  • Osband, Kent
  • Filoso, Valerio
  • Capasso, Salvatore

Abstract

While low real interest rates and issuing public debt in fiat money safeguard against rising sovereign debt-to-GDP ratios, evidence shows that high debt often precedes default, and credit spreads may not signal imminent risk.

Suggested Citation

  • Osband, Kent & Filoso, Valerio & Capasso, Salvatore, 2024. "The limits of limitless debt," Journal of Macroeconomics, Elsevier, vol. 79(C).
    • Handle: RePEc:eee:jmacro:v:79:y:2024:i:c:s0164070423000678
    DOI: 10.1016/j.jmacro.2023.103567
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    More about this item

    Keywords

    Bond market; Bond interest rate; Credit spreads sovereign debt; Sovereign debt default; Debt management surprise;
    All these keywords.

    JEL classification:

    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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