How should the fiscal solvency condition be calculated?

A country's fiscal solvency is ensured if the discounted sum of its future primary fiscal surpluses exceeds the current value of its public debt. If the real interest rate is lower than the growth rate, fiscal solvency is ensured when there are primary fiscal surpluses. But recent analysis 1 shows that this analysis fails to take into account risk. Primary fiscal surpluses are random (they are procyclical) and should therefore not be discounted using the risk-free interest rate. At general equilibrium, the risk premium that should be added is that corresponding to consumer preferences, since the primary fiscal surplus increases consumable income relative to production. The sequence of future fiscal surpluses should therefore be discounted at an interest rate plus a risk premium, which depends on the extent of the procyclical nature of the primary fiscal surplus. We will seek to determine the size of this risk premium in the euro zone by referring to the equity risk premium, which has the same logic, and by comparing the procyclical nature of dividends and the primary fiscal surplus. We also seek to determine to what extent the introduction of this risk premium changes the usual analysis of fiscal solvency. We see that : Future primary fiscal surpluses are procyclical and should therefore be discounted with a risk premium that is slightly lower than the equity risk premium; If we then take a risk premium of 3% to 4%, it drives the real long-term interest rate above the growth rate, and therefore gives rise to a fiscal solvency constraint. 1 Z. Jiang, H. Lustig, S. Van Nieuwerburgh , M. Z.  Xiaolan , “The U.S. Public Debt Valuation Puzzle” NBER Technical Report no. 26583, 2020 2 S. Van Wijnbergen , S. Olijslager , M. de Vette, “Debt sustainability when r - g < 0: no free lunch after all”, CEPR Working Paper no. 15478, November 2020