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Public Debt Ratios Will Increase For Some Time. We Must Make Sure That They Do Not Explode

Author

Listed:
  • Blanchard Olivier

    (Peterson Institute for International Economics, 1750 Massachusetts Avenue, NW, Washington, DC 20036, USA)

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.

Suggested Citation

  • Blanchard Olivier, 2024. "Public Debt Ratios Will Increase For Some Time. We Must Make Sure That They Do Not Explode," The Economists' Voice, De Gruyter, vol. 21(1), pages 159-162.
    • Handle: RePEc:bpj:evoice:v:21:y:2024:i:1:p:159-162:n:1005
    DOI: 10.1515/ev-2024-0014
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    More about this item

    Keywords

    public debt; growth; austerity;
    All these keywords.

    JEL classification:

    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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