Arbeitspapier
Fiscal Sustainability and Low Interest Rates: A Note
In this paper, I demonstrate that an indicator which is commonly used to assess the long-term fiscal sustainability of public finances in EU member states (“S2”) is also defined if government borrowing rates are assumed to be permanently lower than the growth rate of GDP. I illustrate this finding based on simulations prepared for the Fifth Sustainability Report published by the German Federal Ministry of Finance. In addition, I discuss the interpretation of the indicator in a low-interest environment and the assumption that relevant interest rates continue to be low if there are substantial challenges for fiscal sustainability, e.g., through demographic ageing.
- Language
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Englisch
- Bibliographic citation
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Series: CESifo Working Paper ; No. 8861
- Classification
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Wirtschaft
National Budget, Deficit, and Debt: General
Demographic Trends, Macroeconomic Effects, and Forecasts
Interest Rates: Determination, Term Structure, and Effects
- Subject
-
public budget
public debt
fiscal sustainability
interest rates
- Event
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Geistige Schöpfung
- (who)
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Werding, Martin
- Event
-
Veröffentlichung
- (who)
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Center for Economic Studies and Ifo Institute (CESifo)
- (where)
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Munich
- (when)
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2021
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
This object is provided by:
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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Werding, Martin
- Center for Economic Studies and Ifo Institute (CESifo)
Time of origin
- 2021
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