High Public Debt in an Uncertain World: Post-Covid-19 Dangers for Public Finance   [open pdf - 0B]

From the Document: "During the Covid-19 [coronavirus disease 2019] crisis, governments have had little choice but to support the economy while trying to keep the spread of the disease under control; this means accepting large deficits. Now that the health emergency is subsiding, governments have to chart a new course for public finance. The starting point is a higher level of public debt. In some countries, such as Italy or the US, public debt has increased by between 25 and 30 percentage points relative to GDP [gross domestic product]. Moreover, the levels reached by a number of countries (close to 160 percent of GDP for Italy, 130 percent of GDP for the US, 200 percent of GDP for Greece) are above the levels that would have been considered prudent a few years ago. [...] The key reason why high public debt should be considered a potential source of problems, even in an environment of low rates, is another important, but often overlooked, legacy of the Covid-19 crisis: increased uncertainty."

EconPol Europe
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