The Dynamics of Public Debt

Since the mid-seventies fiscal policy in many OECD countries has been faced with the problem of rapidly rising public debt. The dynamics of public debt can be traced to two factors: first, the spread between the interest rate and the growth rate of the economy, and second, the primary budget deficit, i. e. the budget deficit excluding interest payments on public debt. The influence of these two factors on the dynamics of the Austrian public debt is the subject of this paper.