  We introduce a non-zero-sum game between a government and a legislative body
to study the optimal level of debt. Each player, with different time
preferences, can intervene on the stochastic dynamics of the debt-to-GDP ratio
via singular stochastic controls, in view of minimizing non-continuously
differentiable running costs. We completely characterise Nash equilibria in the
class of Skorokhod-reflection-type policies. We highlight the importance of
different time preferences resulting in qualitatively different type of
equilibria. In particular, we show that, while it is always optimal for the
government to devise an appropriate debt issuance policy, the legislator should
optimally impose a debt ceiling only under relatively low discount rates and a
laissez-faire policy can be optimal for high values of the legislator's
discount rate.
