Condition for Convergence of Debt to GDP Ratio Under Full Employment With Consumption From Assets and Impossibility of Fiscal Collapse

We give a simple proof of the Domar condition for the debt-GDP ratio not to diverge, and present conditions for the debt-GDP ratio not to diverge when full employment and consumption from assets are considered. It is a weaker condition than the Domar condition based on a simple comparison of government bond interest rates and growth rates. This condition is probably true in many cases. Also we show that fiscal collapse is impossible when there exists consumption from assets.