Assume that seigniorage and the government's primary deficit are both zero.A change in the debt-to-GDP ratio depends on just

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A change in the debt-to-GDP ratio depends on the growth rate of real GDP and the real interest rate. When the real GDP grows at a rate greater than the real interest rate, the debt-to-GDP ratio decreases, and vice versa. Therefore, if the government's primary deficit and seigniorage are both zero, the growth rate of real GDP and the real interest rate are the only factors affecting the change in the debt-to-GDP ratio.

Assume That Seigniorage and the Government's Primary Deficit Are Both