From Public Debt to Government Equity: A new Perspective

Abstract In a new monetary reality of the 21st century dominated by an economy pricing system with stable inflation, stable interest rate, low growth and low unemployment but high public debt, is recommended to explore new pathways to reduce government sovereign debt. This paper suggests a new perspective on how the Government Sovereign debt could be converted to Government Shareholder’s Equity. In fact, the new theory suggest that government issued-securities could help heavily indebted developing countries reduce the debt-to-GDP ratio by converting the debt-raising capacity to a hybrid debt-securities-raising capacity to translate the borrowed money into economic growth by trying to raise large funds to invest in infrastructure and elevate the level of household’s standard of living. JEL classification: E00, E50, E60. E61, E62, E69, H00, H20, H54, H60, H61, H63 H69.