Advanced Search
MyIDEAS: Login to save this paper or follow this series

On the Feasibility of Debt Ponzi Schemes - A Bond Portfolio Approach


Author Info

  • Martin Barbie
  • Marcus Hagedorn


This paper provides a general approach in the framework of a complete markets stochastic overlapping generations model to assess whether debt Ponzi schemes are feasible and Pareto-improving. We derive conditions in terms of bond interest rates of different maturities which can be used to assess different roll over strategies. Furthermore, we clarify how a dynamic roll over strategy of debt interacts with considerations in providing insurance against aggregate shocks by intergenerational risk sharing. A main result of this paper is that the feasibility of roll over strategies is unrelated to intergenerational insurance considerations that have received much attention in the literature. In fact, under the empirically relevant scenario of countercyclical real interest rates a Pareto improving roll over strategy of debt typically implies an increased variability of old age consumption. We develop a detailed intuition for our results along a series of examples

Download Info

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Bibliographic Info

Paper provided by Econometric Society in its series Econometric Society 2004 North American Winter Meetings with number 541.

as in new window
Date of creation: 11 Aug 2004
Date of revision:
Handle: RePEc:ecm:nawm04:541

Contact details of provider:
Phone: 1 212 998 3820
Fax: 1 212 995 4487
Web page:
More information through EDIRC

Related research

Keywords: Government Debt; Debt Ponzi Scheme; Term Structure of Interest Rates;

Find related papers by JEL classification:


No references listed on IDEAS
You can help add them by filling out this form.



This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.


Access and download statistics


When requesting a correction, please mention this item's handle: RePEc:ecm:nawm04:541. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.