Fiscal sustainability in the aftermath of the great pause

Kenneth Rogoff

Journal of Policy Modeling, 2021, vol. 43, issue 4, 783-793

Abstract: Faced with a global natural catastrophe, countries must spend to deal with the immediate crisis, and to reduce longer-term economic scarring. Sustained infrastructure and education spending can help counter headwinds to the long-term outlook. However, the fact that government borrowing rates are at extremely low levels does not imply that the very high debt, especially short-term borrowing, is a free lunch. Real borrowing rates are likely below long-term trend, and there is no guarantee that any future adverse shock can only lower interest rates. Massive underfunded old-age transfer and support programs are a form of hidden non-market “junior” debt.

Keywords: Debt; Interest rates; Growth (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jpolmo:v:43:y:2021:i:4:p:783-793

DOI: 10.1016/j.jpolmod.2021.02.007

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