Lunchtalk 'Early-warning indicators for debt sustainability'
At this lunchtalk a new CPB report was discussed. The policy brief "Early-warning indicators for debt sustainability" develops a new, dynamic framework for the assessment of the sustainability of public finances in the medium and long term. This framework incorporates economic uncertainty as well as the estimated fiscal policy reactions for each individual country. The paper suggests the use of two indicators for fiscal sustainability, which are applied to nine OECD countries, showing that they clearly distinguish countries that have sustainability concerns (Italy, Spain, Portugal and Iceland) from those that do not (US, UK, Netherlands, Belgium and Germany).