Ratios of public debt as a share of GDP in Brazil, Colombia, and Mexico were 10 percentage pointshigher on average during 1996-2002 than in the period 1990-1995. Costa Rica’s debt ratio remainedstable but at a high level near 50 percent. Is there reason to be concerned for the solvency of the public sector in these…
This paper considers an economy in which policyniakers with different preferences concerning fiscal policy alternate in office as a result of democratic elections. It is shown that in this situation government debt becomes a strategic variable used by each policymakerto influence the choices of his successors. In particular, if different policymakers disagree aboutthe desired composition…
Theoretical literature seeking to explain public-debt accumulation exploded in recentyears as debt crises emerged in many nations. Empirical evaluation of political-economy theorieshas, sadly, lagged that of the standard tax-smoothing/economic-conditions model (0). This paper joins recent work beginning to redress that imbalance, operationalizing and testing nine positive- political-economy-of-public-debt theories, several for the first time. Theories regarding…
The debate on the appropriate responses to the crisis is increasingly, and more directly than ever, calling into question the future of the European Union as a polity. This is a remarkable shift in perspective. Since autumn 2008, the financial and public debt crisis had been represented as a purely internal challenge to the smooth…
