This paper assesses how issuance of GDP-linked debt and longer-maturity debt, in comparison to short-term debt, can help boost fiscal space for a given path of primary balances. By explicitly linking debt service to repayment capacity, GDP-linked debt helps to stabilize the debt ratio under growth uncertainty and reduces default risk through risk sharing with investors. Longer-maturity nominal debt also helps reduce default risk via state-contingent variation in the market price of debt. Reduced default risk in both cases lowers borrowing costs and results in higher maximum sustainable debt levels (and fiscal space given initial debt) for a given path of primary balances. Simulation results suggest sizable gains in fiscal space from the introduction of these instruments, though debtor moral hazard could militate against these benefits.

中文翻译：

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扩大财政空间：与 GDP 相关的债务和更长期限的作用

本文评估了与短期债务相比，与 GDP 挂钩的债务和期限较长的债务的发行如何有助于扩大既定初级余额路径的财政空间。通过明确将偿债能力与偿债能力挂钩，GDP挂钩债务有助于在增长不确定的情况下稳定债务比率，并通过与投资者分担风险来降低违约风险。较长期限的名义债务还有助于通过债务市场价格的状态或有变化来降低违约风险。在这两种情况下，违约风险的降低都会降低借贷成本，并导致给定的初级余额路径的最大可持续债务水平（以及给定初始债务的财政空间）更高。模拟结果表明，通过引入这些工具，财政空间获得了可观的收益，尽管债务人的道德风险可能会阻碍这些收益。