advaitmoharir / debt-projections

Debt Projections

WIP

This repository hosts the data and code for Monetary Fiscal Coordination and the Evolution of Public Debt: A Simple Simulation Exercise, published in the Economic and Political Weekly.

The paper simulates trajectories if India's debt to GDP ratio for the period 2022-2027, under four scenarios: Baseline, Fixed Deficit, Fixed Interest Rates, and Rising Inflation. The simulation is done using the Law of Motion of Government Debt, given by:

$$ b_{t+1}= \frac{1+i}{1+g+\pi}b_{t}+d_{t}$$

where $b$ is the debt to GDP ratio, $i$ is the nominal interest rate, $g$ is the nominal growth rate, and $d$ is the primary deficit.

Code

The script used to simulate the four scenarios is stored in the folder code.

Figures

These are stored in the folder figures.

Software