Debt indexed to GDP in the Portuguese economy
Public debt crises bring enormous economic and social costs. The use of contingent public debt instruments has the potential to avoid such crises. In contrast to traditional public debt, these instruments reflect the economic conditions of the country issuing the debt securities, as they are linked to indicators such as the GDP. However, the explicit use of these instruments remains very limited.
Based on Portugal's experience with treasury bills, this study by Fundação Francisco Manuel dos Santos, produced by Gonçalo Pina, a professor at the ESCP Business School in Berlin, analyses the opportunities and challenges of these financing instruments, pointing out ways of applying them in different areas. In this way, it contributes to the understanding of these markets in dimensions that are still insufficiently researched through:
- a new database of existing examples of contingent public debt instruments around the world
- a structural model of public indebtedness using contingent debt instruments, applied to Portugal.
Through this study, Fundação Francisco Manuel dos Santos seeks to contribute to thinking about the present and future of Portuguese public debt, a decisive issue for the country.
