A market-financed and growth-enhancing investment plan for the euro area |
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| Authors: | Pompeo Della Posta Enrico Marelli Marcello Signorelli |
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| Institution: | 1. Department of Economics and Management, University of Pisa, Pisa, Italy;2. Department of Economics and Management, University of Brescia, Brescia, Italy;3. Department of Economics, University of Perugia, Perugia, Italy |
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| Abstract: | 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. |
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| Keywords: | Fiscal policy GDP growth Investment plan Public debt sustainability Public debt-to-GDP stability |
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