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Public Debt Ratios Will Increase For Some Time. We Must Make Sure That They Do Not Explode
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Olivier Blanchard
Published/Copyright:
March 26, 2024
Abstract
Given high long-term interest rates, most industrial countries have to either cut spending or increase taxes to contain government debt. As an immediate fiscal consolidation would cause economic and political harm, adjustment must be steady and slow, based on a credible plan. This implies that government debt levels have to increase before falling. This is not good, but not catastrophic, as advanced economies can sustain a higher debt ratio, so long as it is not exploding.
JEL Classification: H63
Reference
Blanchard, Olivier. 2023. Fiscal Consolidation Under Low Interest Rates. Cambridge, Massachusetts: MIT Press.10.7551/mitpress/14858.001.0001Search in Google Scholar
Received: 2024-03-11
Accepted: 2024-03-11
Published Online: 2024-03-26
© 2024 Walter de Gruyter GmbH, Berlin/Boston
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Articles in the same Issue
- Frontmatter
- Editorial
- Economic Policy Making Under Hardening Fiscal Constraints
- Policy Papers (No Special Focus)
- A Latticework of Inflation Models
- A Comparative Evaluation of Fiscal Stabilization Strategies during the Covid-19 Pandemic with Germany as a Reference Point
- The Relationship Between the German Current Account and Financial Account: Evidence from the Toda-Yamamoto Causality Approach
- The Tax Attractiveness of EU Locations for Corporate Investments: A Stocktaking of Past Developments and Recent Reforms
- Aid in Conflict: Determinants of International Aid Allocation to Ukraine During the 2022 Russian Invasion
- Policy Forum: Economic Policy in an Era of Hardening Fiscal Constraints
- Public Debt Ratios Will Increase For Some Time. We Must Make Sure That They Do Not Explode
- An EU Fund to Incentivise Public Investments with Positive Externalities
- The Case for Putting a Public Investment Clause into the German Debt Brake
- EU Debt Instruments and Fiscal Transparency: The Case of the EU Recovery Fund
- Explaining the Divergence in German and French Public Finances
- Fiscal Prospects for Italy
- The Swiss Debt Brake Is Democratic, Strict, Transparent, and Binding. A Model to Follow?
