Identify the four factors that determine the sustainability of government debt and explain the impact of each on sustainable debt

If the government of a country is able to meet all its current and future payment obligations without any exceptional financial assistance or going to default, Then the public debt of the country is said to be sustainable debt.

public debt : public debt is also known as government debt. It represents the total outstanding debt of the centralgovernment of a nation.

There are various factors or indicators that determine the sustainability of a government debt. they are as follows

a)Interest rate : the persistence of conditions in which interest rates remain below growth rates makes government Ponzi schemes consistent with stable or declining debt ratios.

b)Economic Growth : It states that, if the primary surplus-GDP ratio is a positive function of the debt-GDP ratio, a given public debt policy can be shown to be sustainable.

c)Inflation: The sustainable fiscal debt in an inflationary environment was found to equal the present value of primary balances discounted by the time preference rate of government, not by the interest rate.

d)surplus : if the primary surplus-GDP ratio is a positive function of the debt-GDP ratio, a given public debt policy can be shown to be sustainable