Is the Public Debt Still Sustainable?

Quantified analysis of public debt sustainability raises challenges that standard approaches don't solve. Debt Sustainability Analysis (DSA) as conducted par international institutions such as IMF or European Commission use too much convention and are insufficiently transparent. We propose a new definition of sustainability of public debt and a modelisation of public debt dynamic which allow to deal with the speculativeness needed for sustainability analysis. Public choices, e.g. fiscal or monetary policies, change radically the dynamic of public debt. Therefore, DSAs, by rooting those elements in past observations with a monetary or a fiscal rule, miss the point and fail to take in account all possible futures. With a model where fiscal policy is computed forward looking, in order to reach a public debt target in the medium term, different paths for the economy (inflation, long term growth, short term outcomes) can be considered and the difficulty to reach the public debt target can be quantified. Sustainability is thus the ability to accept difficult policies.