Debt-to-GDP Ratio

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Debt-to-GDP Ratio

A ratio of a country's national debt to its GDP. The debt-to-GDP ratio is one way to estimate whether or not a country will be able to repay its debt. The higher the ratio is, the more likely a country is to default because its government has borrowed too much relative to the ability of the country as a whole to repay. This may affect the country's sovereign credit rating. However, this ratio is not the only metric used. For example, the United States and the United Kingdom maintain national debts that approach 100% of GDP, but both have AAA credit ratings because the political risk in both countries is very low.
References in periodicals archive ?
Overall, flexible exchange-rate regimes mitigate the effects of commodity export price shocks on government fiscal balances, even as those regimes lead to debt-to-GDP ratios that are more sensitive to shocks.
uCaDespite a reduction in the aggregate debt burdens across commodity groups from 1990-2012, our analysis shows that an increase in commodity prices raises the debt-to-GDP ratio for exporters of agricultural raw materials and metals, but lowers this ratio for fuel exporters, when controlling for time and country- specific factors;
The multiplier effect depends on the debt level and debt-to-GDP ratios in the main sectors of the economy.
2 per cent at end-2013, in stark contrast with many of the world's largest economies, where debt-to-GDP ratios are approaching or well above 100 per cent.
2] is nonstochastic, and earlier debt-to-GDP ratios depend only on conditional expectations of future real GDP growth rates.
6% in the euro area, while debt-to-GDP ratios reach almost 90% in the EU and 96% in the euro area.
Unlike Italy or Greece, Spain did not overspend before 2008," said Schaitkin, "and in fact had one of Europe's best government debt-to-GDP ratios.
For example, Brazil and Mexico defaulted in the early 1980s when their debt-to-GDP ratios were only 50 percent, whereas Japan has not defaulted in the post-World War II period, even though its debt burden has exceeded 100 percent since the mid-1990s and is currently 200 percent.
For Ireland and Portugal, debt dynamics look less unfavorable than for Greece, while still being very challenging - both countries will have debt-to-GDP ratios of more than 100 per cent by 2012.
But even for the average Asian country, without fiscal adjustment, debt-to-GDP ratios are projected to remain above pre-crisis levels through 2014," he said at a Federal Reserve Bank of San Francisco conference in Santa Barbara, California.
The recent financial and banking crises and global recession increased annual deficits and debt-to-GDP ratios in many countries, as often occurs after such crises.
In this limiting textbook case, since all countries borrow at the common equilibrium world rate, the cross sectional dispersion of countries' debt-to-GDP ratios will not help to explain the common level of the world real interest rate.