eprintid: 268
rev_number: 13
eprint_status: archive
userid: 27
dir: disk0/00/00/02/68
datestamp: 2011-07-04 09:21:21
lastmod: 2016-04-06 08:01:33
status_changed: 2011-07-04 09:21:21
type: article
metadata_visibility: show
item_issues_count: 0
creators_name: Petersen, Alexander M.
creators_name: Podobnik, Boris
creators_name: Horvatic, Davor
creators_name: Stanley, H. Eugene
creators_id: alexander.petersen@imtlucca.it
creators_id: 
creators_id: 
creators_id: 
title: Scale-invariant properties of public-debt growth
ispublished: pub
subjects: HB
subjects: QC
divisions: EIC
full_text_status: none
note: PACS: 89.65.Gh Economics; econophysics, financial markets, business and management; 89.90.+n Other topics in areas of applied and interdisciplinary physics (restricted to new topics in section 89); 89.75.Da Systems obeying scaling laws

abstract: 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 .
date: 2010
date_type: published
publication: EPL (Europhysics Letters)
volume: 90
number: 3
publisher: IOPscience
pagerange: 38006
id_number: 10.1209/0295-5075/90/38006
refereed: TRUE
issn: 0295-5075      
official_url: http://stacks.iop.org/0295-5075/90/i=3/a=38006
related_url_url: http://arxiv.org/abs/1002.2491
citation:   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)