Analysis of the sustainability of public debt: An applied study on the G-7 countries

Public debts have been used as a fiscal tool in meeting the resource need by almost every country in the historical process. The extraordinary periods experienced on regional and global scale, in which the world economy has lived for almost fifty years, have drawn attention to the sustainability of public debt. Especially, developed countries have come to the fore in this regard in recent years. G-7 countries are among the ones with the highest public debt in the world. In this study, the sustainability of public debts in G7 countries is examined. For this purpose, the issue has been handled within the framework of macroeconomic indicators and panel data tests, which take into account the cross-section dependence and the impact of structural breaks on model results. Intertemporal Budget Constraint Model was taken into consideration for the analysis made using the data of the 1978-2018 period. According to the results of test, public debt sustainability was found to be "weak" in G-7 countries.