IDEAS home Printed from https://ideas.repec.org/a/cai/repdal/redp_226_0921.html
   My bibliography  Save this article

L'insoutenable dynamique de la dette. Une analyse macroéconomique du défaut souverain

Author

Listed:
  • Michel Guillard
  • Hubert Kempf

Abstract

The macroeconomic sustainability of public debt is addressed when the interaction between fiscal and monetary policies is taken into account, as well as the possibility of default. Taking into account a rule of default, we distinguish the “default threshold” from the “unsustainability threshold”. The former one corresponds to the upper limit to public debt ; the latter one to the level above which, absent any further shock, the dynamics of public debt leads to future default. When this threshold is exceeded, the risk premium is high enough so as to generate future default, which itself feeds the risk premium. When a default occurs, the haircut applied on the existing amount of debt depends on the default rule. We show that a “successful default” is such that the ex post debt level is sustainable, which means that the ex post default risk premium is small enough and thus leads to a decreasing debt to GDP ratio. This implies that the haircut on public debt must be high enough.

Suggested Citation

  • Michel Guillard & Hubert Kempf, 2012. "L'insoutenable dynamique de la dette. Une analyse macroéconomique du défaut souverain," Revue d'économie politique, Dalloz, vol. 122(6), pages 921-941.
  • Handle: RePEc:cai:repdal:redp_226_0921
    as

    Download full text from publisher

    File URL: http://www.cairn.info/load_pdf.php?ID_ARTICLE=REDP_226_0921
    Download Restriction: free

    File URL: http://www.cairn.info/revue-d-economie-politique-2012-6-page-921.htm
    Download Restriction: free

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sokolova, Anna, 2015. "Fiscal limits and monetary policy: default vs. inflation," Economic Modelling, Elsevier, vol. 48(C), pages 189-198.

    More about this item

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cai:repdal:redp_226_0921. 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: (Jean-Baptiste de Vathaire). General contact details of provider: http://www.cairn.info/revue-d-economie-politique.htm .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.