relation: http://eprints.imtlucca.it/268/
title: Scale-invariant properties of public-debt growth
creator: Petersen, Alexander M.
creator: Podobnik, Boris
creator: Horvatic, Davor
creator: Stanley, H. Eugene
subject: HB Economic Theory
subject: QC Physics
description: Public debt is one of the important economic variables that quantitatively describes a nation's economy. Because bankruptcy is a risk faced even by institutions as large as governments (e.g., Iceland), national debt should be strictly controlled with respect to national wealth. Also, the problem of eliminating extreme poverty in the world is closely connected to the study of extremely poor debtor nations. We analyze the time evolution of national public debt and find "convergence": initially less-indebted countries increase their debt more quickly than initially more-indebted countries. We also analyze the public debt-to-GDP ratio {\cal R} , a proxy for default risk, and approximate the probability density function P({\cal R}) with a Gamma distribution, which can be used to establish thresholds for sustainable debt. We also observe "convergence" in {\cal R} : countries with initially small {\cal R} increase their {\cal R} more quickly than countries with initially large {\cal R} . The scaling relationships for debt and {\cal R} have practical applications, e.g. the Maastricht Treaty requires members of the European Monetary Union to maintain {\cal R} < 0.6 .
publisher: IOPscience
date: 2010
type: Article
type: PeerReviewed
identifier:   Petersen, Alexander M. and Podobnik, Boris and Horvatic, Davor and Stanley, H. Eugene  Scale-invariant properties of public-debt growth.  EPL (Europhysics Letters), 90 (3).  p. 38006.  ISSN 0295-5075       (2010)  
relation: http://stacks.iop.org/0295-5075/90/i=3/a=38006
relation: 10.1209/0295-5075/90/38006