Sustainability and Optimality of Public Debt

Public debt seems to be one of the great issues of the nineties. The United States have turned from the largest creditor of the world to the largest debtor, due to dramatic budget deficits. The European Union tries to build dams against the flood, see the treaty of Maastricht. And in Germany, public debt tends to explo­ de, doubling within a few years. The reason for this is the immense cost of Ge...