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A market‐financed and growth‐enhancing investment plan for the euro area
Author(s) -
Della Posta Pompeo,
Marelli Enrico,
Signorelli Marcello
Publication year - 2020
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/meca.12294
Subject(s) - economics , investment (military) , debt , monetary economics , sustainable growth rate , realization (probability) , sustainability , macroeconomics , public investment , international economics , finance , fiscal policy , political science , law , ecology , statistics , mathematics , politics , biology
In this paper, we analyze the problem of public debt‐to‐GDP stability in the Eurozone. We suggest that a feasible solution might be the realization of a market‐financed, growth‐enhancing investment program, which would be particularly welcome because of the positive short‐ and long‐term repercussions it would have on GDP growth and the stabilizing effects on interest rates. Some simulations allow us to quantify these effects. The consequences of the COVID‐19 pandemic further reinforce our policy implications in terms of public debt sustainability.