Download This PaperThe Value of Government Debt
26 Pages Posted: 23 Jul 2019 Last revised: 16 Apr 2023
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The Value of Government Debt
Number of pages: 25
Posted: 12 Jul 2019
Last Revised: 26 Feb 2020
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161
Date Written: July 2019
Abstract
The market value of government debt equals the present discounted value of primary surpluses. Applying present value decompositions from asset pricing to this valuation equation, I find that half of the variation in the market value of debt to GDP ratio corresponds to varying forecasts of future primary surpluses, and half to varying discount rates. Variation in expected growth rates is unimportant.
Suggested Citation: Suggested Citation
Cochrane, John H., The Value of Government Debt (July 2019). NBER Working Paper No. w26090, Available at SSRN: https://ssrn.com/abstract=3423803
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