A market-financed and growth-enhancing investment plan for the euro area

摘要

In this paper, we analyze the problem of public debt-to-GDP stability in the Eurozone. We suggest that a feasible solution might be the realization of a market-financed, growth-enhancing investment program, which would be particularly welcome because of the positive short- and long-term repercussions it would have on GDP growth and the stabilizing effects on interest rates. Some simulations allow us to quantify these effects. The consequences of the COVID-19 pandemic further reinforce our policy implications in terms of public debt sustainability.