Scale-invariant properties of public-debt growth
Public debt is one of the important economic variables that quantitatively describes a nation's economy. Because bankruptcy is a risk faced even by institutions as large as governments (e.g., Iceland), national debt should be strictly controlled with respect to national wealth. Also, the proble...
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ftimtlucca:oai:eprints.imtlucca.it:268 2023-05-15T16:50:06+02:00 Scale-invariant properties of public-debt growth Petersen, Alexander M. Podobnik, Boris Horvatic, Davor Stanley, H. Eugene 2010 http://eprints.imtlucca.it/268/ http://stacks.iop.org/0295-5075/90/i=3/a=38006 unknown IOPscience Petersen, Alexander M. and Podobnik, Boris and Horvatic, Davor and Stanley, H. Eugene Scale-invariant properties of public-debt growth. EPL (Europhysics Letters), 90 (3). p. 38006. ISSN 0295-5075 (2010) HB Economic Theory QC Physics Article PeerReviewed 2010 ftimtlucca 2022-04-11T05:30:57Z Public debt is one of the important economic variables that quantitatively describes a nation's economy. Because bankruptcy is a risk faced even by institutions as large as governments (e.g., Iceland), national debt should be strictly controlled with respect to national wealth. Also, the problem of eliminating extreme poverty in the world is closely connected to the study of extremely poor debtor nations. We analyze the time evolution of national public debt and find "convergence": initially less-indebted countries increase their debt more quickly than initially more-indebted countries. We also analyze the public debt-to-GDP ratio {\cal R} , a proxy for default risk, and approximate the probability density function P({\cal R}) with a Gamma distribution, which can be used to establish thresholds for sustainable debt. We also observe "convergence" in {\cal R} : countries with initially small {\cal R} increase their {\cal R} more quickly than countries with initially large {\cal R} . The scaling relationships for debt and {\cal R} have practical applications, e.g. the Maastricht Treaty requires members of the European Monetary Union to maintain {\cal R} < 0.6 . Article in Journal/Newspaper Iceland IMT (Institutions Markets Technologies) Institute for Advanced Studies Lucca: Repository |
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IMT (Institutions Markets Technologies) Institute for Advanced Studies Lucca: Repository |
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HB Economic Theory QC Physics |
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HB Economic Theory QC Physics Petersen, Alexander M. Podobnik, Boris Horvatic, Davor Stanley, H. Eugene Scale-invariant properties of public-debt growth |
topic_facet |
HB Economic Theory QC Physics |
description |
Public debt is one of the important economic variables that quantitatively describes a nation's economy. Because bankruptcy is a risk faced even by institutions as large as governments (e.g., Iceland), national debt should be strictly controlled with respect to national wealth. Also, the problem of eliminating extreme poverty in the world is closely connected to the study of extremely poor debtor nations. We analyze the time evolution of national public debt and find "convergence": initially less-indebted countries increase their debt more quickly than initially more-indebted countries. We also analyze the public debt-to-GDP ratio {\cal R} , a proxy for default risk, and approximate the probability density function P({\cal R}) with a Gamma distribution, which can be used to establish thresholds for sustainable debt. We also observe "convergence" in {\cal R} : countries with initially small {\cal R} increase their {\cal R} more quickly than countries with initially large {\cal R} . The scaling relationships for debt and {\cal R} have practical applications, e.g. the Maastricht Treaty requires members of the European Monetary Union to maintain {\cal R} < 0.6 . |
format |
Article in Journal/Newspaper |
author |
Petersen, Alexander M. Podobnik, Boris Horvatic, Davor Stanley, H. Eugene |
author_facet |
Petersen, Alexander M. Podobnik, Boris Horvatic, Davor Stanley, H. Eugene |
author_sort |
Petersen, Alexander M. |
title |
Scale-invariant properties of public-debt growth |
title_short |
Scale-invariant properties of public-debt growth |
title_full |
Scale-invariant properties of public-debt growth |
title_fullStr |
Scale-invariant properties of public-debt growth |
title_full_unstemmed |
Scale-invariant properties of public-debt growth |
title_sort |
scale-invariant properties of public-debt growth |
publisher |
IOPscience |
publishDate |
2010 |
url |
http://eprints.imtlucca.it/268/ http://stacks.iop.org/0295-5075/90/i=3/a=38006 |
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Iceland |
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Iceland |
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Petersen, Alexander M. and Podobnik, Boris and Horvatic, Davor and Stanley, H. Eugene Scale-invariant properties of public-debt growth. EPL (Europhysics Letters), 90 (3). p. 38006. ISSN 0295-5075 (2010) |
_version_ |
1766040283094450176 |