Debt and Monetary Policy: The Policy Issues

Rudiger Dornbusch

No 5573, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The paper explores the implications of high debt for monetary policy. In Europe, debt (and deficits) play a special role at present in the run up to Maastricht because large debts are seen as a threat to the integrity of the new European money. The paper reviews two historical episodes-- the German, UK, and French experience in the 1920s and the US debt liquidation of the 1950-1980 period. The theoretical review focuses on hypotheses of Keynes, Clark and Sargent- Wallace. The paper adds to the range of concerns private balance sheet vulnerability.

JEL-codes: E5 E6 (search for similar items in EconPapers)
Date: 1996-05
Note: IFM ME
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