 Public and Private Debt: The Historical Record (1870–2010)German Economic Review, 2014, vol. 15, issue 1, 191-207 Abstract: type="main" xml:id="geer12031-abs-0001"> Economists routinely emphasize the risks of excessive public borrowing, but tend to have a more benign view of private sector debt. In this study, I draw on recent comparative studies of the macroeconomic history of advanced economies since 1870. I synthesize four historical facts and argue that a more balanced view of public and private borrowing is warranted. First, while both public and private debts have increased markedly, private, not public debts have climbed to historically unprecedented levels. Second, outside war times, financial crises have typically originated in the private sector, yet the costs have increasingly been socialized. Third, the historical record shows that modern democracies have been relatively successful in managing their financial affairs, evidenced by a systematically positive response of primary balances to high debt ratios. Fourth, I demonstrate that private and public debt cycles have been tightly linked since the 1970s. Date: 2014 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:germec:v:15:y:2014:i:1:p:191-207 Ordering information: This journal article can be ordered from Access Statistics for this article German Economic Review is currently edited by Bernhard Felderer, Joseph F. Francois, Ivo Welch, Urs Schweizer and David E. Wildasin More articles in German Economic Review from Verein für Socialpolitik Contact information at EDIRC. |
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