Fiscal stagnation

dc.contributor.author Fornaro, Luca
dc.contributor.author Wolf, Martin
dc.date.accessioned 2025-04-29T11:44:32Z
dc.date.available 2025-04-29T11:44:32Z
dc.date.issued 2025-04
dc.description.abstract We study public debt sustainability in an economy with endogenous productivity growth. Our model has two key features: i) financing large primary surpluses entails fiscal distortions that depress investment and growth, ii) low growth increases the primary surpluses needed to stabilize the public debt-to-GDP ratio. Negative shocks to fundamentals or pessimistic animal spirits may drive the economy into a state of fiscal stagnation, characterized by high public debt, large fiscal distortions and low productivity growth. We discuss policy options to avoid/escape fiscal stagnation.
dc.identifier.uri http://hdl.handle.net/10230/70240
dc.language eng
dc.language.iso eng
dc.rights.accessRights info:eu-repo/semantics/openAccess
dc.subject.keyword Fiscal policyen
dc.subject.keyword Public debten
dc.subject.keyword Endogenous productivity growthen
dc.subject.keyword Stagnationen
dc.subject.keyword Investmenten
dc.title Fiscal stagnation
dc.type info:eu-repo/semantics/workingPaper

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