Rethinking Debt Metrics for Policy

Policymakers and markets should stop treating debt‑to‑GDP as the sole or dominant indicator of fiscal health and adopt a small battery of theoretically grounded measures (interest‑to‑GDP, debt‑to‑equity/wealth, and debt service burden) reported and debated together. Using multiple, provenance‑explained indicators reduces the risk of policy overreaction or complacency driven by a single, potentially misleading ratio. — This reframes fiscal debates: metric choice changes perceived sustainability and therefore tax, spending, and monetary policy decisions across countries and time horizons.