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An Approach to Measuring the Affordability of State Debt
Author(s) -
Brecher Charles,
Richwerger Kurt,
Wagner Marcia Van
Publication year - 2003
Publication title -
public budgeting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.694
H-Index - 30
eISSN - 1540-5850
pISSN - 0275-1100
DOI - 10.1111/j.0275-1100.2003.02304004.x
Subject(s) - debt , normative , state (computer science) , jurisdiction , external debt , measure (data warehouse) , economics , guideline , debt to gdp ratio , element (criminal law) , business , public economics , actuarial science , accounting , macroeconomics , political science , law , computer science , data mining , algorithm
Affordability is one important and widely accepted element of state and local debt policy. However, there is no well‐established measure of affordability and no clear standard for making normative judgments about what amount of debt is affordable for a specific jurisdiction. This article suggests a six‐step method for measuring affordability of state debt that provides a useful guideline for determining when a state may be entering a “danger zone” by having debt that exceeds norms of affordability.