/debt-projections

Primary LanguagePython

Debt Projections

This repository hosts the data and code for Monetary Fiscal Coordination and the Evolution of Public Debt: A Simple Simulation Exercise, published in the Economic and Political Weekly.

The paper simulates trajectories if India's debt to GDP ratio for the period 2022-2027, under four scenarios: Baseline, Fixed Deficit, Fixed Interest Rates, and Rising Inflation. The simulation is done using the Law of Motion of Government Debt, given by:

$$ b_{t+1}= \frac{1+i}{1+g+\pi}b_{t}+d_{t}$$

where $b$ is the debt to GDP ratio, $i$ is the nominal interest rate, $g$ is the nominal growth rate, and $d$ is the primary deficit.

Repo Structure

  • 01_data: Data needed to produce Figures 1 & 2
  • 02_code: Code to run projections and generate Figures 1 & 2
  • 03_ figures: Figures 1 and 2

Replication

Ensure you have the following packages installed in Python: pandas, plotly, kaleido, pyprojroot, matplotlib, numpy. Now follow the steps below

  1. Open the folder debt-projections after you download the repo in your text editor (say, VSCode).

  2. Open and run 02_code/projections.py. This should create Figures 1 and 2 in the folder 03_figures.

Software

Projections were run using Python 3.11 and csvs were stored in Microsoft Excel 16.

Software