Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/217029 
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8278
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper incorporates a bubble term in the standard FTPL equation to explain why countries with persistently negative primary surpluses can have a positively valued currency and low inflation. It also provides an example with closed-form solutions in which idiosyncratic risk on capital returns depresses the interest rate on government bonds below the economy's growth rate.
JEL: 
E44
E52
E63
Document Type: 
Working Paper
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