A bit of Keynesian debt-to-GDP arithmetic for deficit-capped countries

Stefano Di Bucchianico

Bulletin of Political Economy, 2019, vol. 13, issue 1, 55-83

Abstract: This paper expands some recent Keynesian debt-to-GDP arithmetic exercises in three respects. Firstly, it analyses the output and capacity losses associated with a ‘balanced budget’ fiscal policy. Secondly, the possible Keynesian features of a policy looking at the difference between the growth rate and the interest rate are also discussed, showing a condition which allows for a debt-to-GDP ratio reduction via primary deficit spending. Lastly, the minimum necessary fiscal multiplier values needed to make austerity policy counterproductive are calculated for the PIGS economies covering the 1998 – 2018 period. The results show the substantial case for the Keynesian arithmetic to hold.

Keywords: Public debt; debt-to-GDP ratio; fiscal policy; fiscal multiplier (search for similar items in EconPapers)
JEL-codes: E62 H62 H63 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://serialsjournals.com/abstract/75690_3-di_bucchianico.pdf (application/pdf)
https://www.bulletinofpe.com/stefano-di-bucchianico-20191 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:awu:journl:v:13:y:2019:i:1:p:55-83

Access Statistics for this article

More articles in Bulletin of Political Economy from Bulletin of Political Economy
Bibliographic data for series maintained by Maria Cristina Barbieri Goes ().