We are surrounded by apocalyptic warnings about heavy debts dragging down economic growth and burdening future generations. Yet, as Professor Rui Esteves argues in a recent co-authored book, the entire history of public debt demonstrates its usefulness.
The rise of public debts following governments’ response to the COVID-19 pandemic prompted apocalyptic warnings about the dangers of heavy debts – about the drag they will place on economic growth and for future generations.
In the video below on his latest book, co-authored with Barry Eichengreen, Asmaa El-Ganainy and Kris James Mitchener, Professor Rui Esteves argues that in history and today the ability of governments to borrow has played a critical role in meeting emergencies and funding essential public goods and services.
Many nations did manage to deal with their problems of debt sustainability through a combination of (1) fiscal restraint (when the time was right – not during the crisis), (2) helping their economies to grow, and even (3) keeping modest levels of inflation. A central message of the book is therefore that public debt sustainability must be dealt with in the long term and with those three aims in view, as doing without them might probably be a recipe for disaster – and this message is directly applicable to the world we’re in right now.
The book is published by Oxford University Press: https://global.oup.com/academic/produ...