Long-run perspectives on r-g in OECD countries : an empirical analysis
- Author
- Freddy Heylen (UGent) , Marthe Mareels (UGent) and Christophe Van Langenhove (UGent)
- Organization
- Project
- Abstract
- The difference between the implicit nominal interest rate and the growth rate of nominal GDP is a key determinant of the dynamics and the sustainability of public debt. This paper studies the determinants of r-g in a panel of 17 OECD countries since the early 1980s. Whereas the focus of existing empirical studies is mainly on fiscal, monetary and financial factors behind the interest-growth difference, our approach and contribution are to highlight in particular the role of real long-run determinants, such as technical progress, employment growth, demographic change, and income inequality. This allows us to derive empirically based projections for r-g beyond the next five or ten years. Our baseline expectation is that r-g will stay below zero for the next two decades in most European countries that we study. An important policy implication is that the debt-carrying capacity of governments is substantially higher now than in the 1980s or 1990s. For the United States, however, our baseline projection of r-g is positive.
- Keywords
- public debt, r-g, fiscal sustainability, demographic change, inequality, panel data
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Heylen, Mareels, VanLangenhove, r-g, JIMF 2024, with Appendix.pdf
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Citation
Please use this url to cite or link to this publication: http://hdl.handle.net/1854/LU-01J1Q82DEQ4B6KFWJTERT02E59
- MLA
- Heylen, Freddy, et al. “Long-Run Perspectives on r-g in OECD Countries : An Empirical Analysis.” JOURNAL OF INTERNATIONAL MONEY AND FINANCE, vol. 145, 2024, doi:10.1016/j.jimonfin.2024.103093.
- APA
- Heylen, F., Mareels, M., & Van Langenhove, C. (2024). Long-run perspectives on r-g in OECD countries : an empirical analysis. JOURNAL OF INTERNATIONAL MONEY AND FINANCE, 145. https://doi.org/10.1016/j.jimonfin.2024.103093
- Chicago author-date
- Heylen, Freddy, Marthe Mareels, and Christophe Van Langenhove. 2024. “Long-Run Perspectives on r-g in OECD Countries : An Empirical Analysis.” JOURNAL OF INTERNATIONAL MONEY AND FINANCE 145. https://doi.org/10.1016/j.jimonfin.2024.103093.
- Chicago author-date (all authors)
- Heylen, Freddy, Marthe Mareels, and Christophe Van Langenhove. 2024. “Long-Run Perspectives on r-g in OECD Countries : An Empirical Analysis.” JOURNAL OF INTERNATIONAL MONEY AND FINANCE 145. doi:10.1016/j.jimonfin.2024.103093.
- Vancouver
- 1.Heylen F, Mareels M, Van Langenhove C. Long-run perspectives on r-g in OECD countries : an empirical analysis. JOURNAL OF INTERNATIONAL MONEY AND FINANCE. 2024;145.
- IEEE
- [1]F. Heylen, M. Mareels, and C. Van Langenhove, “Long-run perspectives on r-g in OECD countries : an empirical analysis,” JOURNAL OF INTERNATIONAL MONEY AND FINANCE, vol. 145, 2024.
@article{01J1Q82DEQ4B6KFWJTERT02E59,
abstract = {{The difference between the implicit nominal interest rate and the growth rate of nominal GDP is a key determinant of the dynamics and the sustainability of public debt. This paper studies the determinants of r-g in a panel of 17 OECD countries since the early 1980s. Whereas the focus of existing empirical studies is mainly on fiscal, monetary and financial factors behind the interest-growth difference, our approach and contribution are to highlight in particular the role of real long-run determinants, such as technical progress, employment growth, demographic change, and income inequality. This allows us to derive empirically based projections for r-g beyond the next five or ten years. Our baseline expectation is that r-g will stay below zero for the next two decades in most European countries that we study. An important policy implication is that the debt-carrying capacity of governments is substantially higher now than in the 1980s or 1990s. For the United States, however, our baseline projection of r-g is positive.}},
articleno = {{103093}},
author = {{Heylen, Freddy and Mareels, Marthe and Van Langenhove, Christophe}},
issn = {{0261-5606}},
journal = {{JOURNAL OF INTERNATIONAL MONEY AND FINANCE}},
keywords = {{public debt,r-g,fiscal sustainability,demographic change,inequality,panel data}},
language = {{eng}},
pages = {{19}},
title = {{Long-run perspectives on r-g in OECD countries : an empirical analysis}},
url = {{http://doi.org/10.1016/j.jimonfin.2024.103093}},
volume = {{145}},
year = {{2024}},
}
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