les cahiers du mecas
Volume 22, Numéro 1, Pages 482-496
2026-06-02
Financial Sustainability And The Debt-stabilizing Rule In The New Keynesian Dynamic Stochastic General Equilibrium (dsge) Model
Authors : Chati Bobakeur . Chibi Abderrahim . Benbouziane Mohamed .
Abstract
This article examines the dynamics of financial sustainability in an open economy exposed to oil price shocks, using a baseline New Keynesian Dynamic Stochastic General Equilibrium (DSGE) model based on the three core equations. The model is extended to include a public sector characterized by an intertemporal budget constraint and a simplified fiscal block that links the primary balance to public debt. Two scenarios are compared: (a) the absence of a fiscal rule, where the government does not respond to debt gaps, and (b) the presence of a debt-stabilizing rule, where the primary balance adjusts proportionally to the debt level.
Keywords
Public debt; ; fiscal policy; ; fiscal rule; ; simplified New Keynesian DSGE
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