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October 19, 2025Open Access

Do Governments React to Public Debt Accumulation? A Cross-Country Analysis

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Authors

PCPaolo CanofariMarche Polytechnic UniversityAPAlessandro PiergalliniUniversity of Rome Tor VergataMTMarco TedeschiMarche Polytechnic University

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Overview

Analysis reveals budgetary policies adjust to debt accumulation in various economies, indicating fiscal responsibility.

Key Points

  • A 10-percentage-point rise in the debt-to-GDP ratio raises the primary surplus-to-GDP ratio by 0.5 percentage points on average.
  • The study shows that primary-balance rules with tax-smoothing significantly explain fiscal behavior across multiple countries.
  • Governments, regardless of debt levels, demonstrate policy adjustments that align with Ricardian principles in handling public debt.
  • The findings suggest a commitment to avoiding Ponzi-type financing practices, indicating a proactive fiscal approach.

Cite This Study

Canofari et al. (2025) studied this question.

synapsesocial.com/papers/68f4b10d3d9d770bbc697113https://doi.org/10.48550/arxiv.2507.13084
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  1. 1Do Governments React to Public Debt Accumulation? A Cross-Country Analysis2025
  2. 2Fiscal Cyclicality and Debt Sustainability: Evidence From Over a Century of Data2026 · 1 citations
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  5. 5Fiscal sustainability under an endogenous fiscal feedback rule: a state space approach2025