Public Debt and Global Austerity

E Ray Canterbery

Chapter 7 in The Rise and Fall of Global Austerity, 2015, pp 121-138 from World Scientific Publishing Co. Pte. Ltd.

Abstract: During economic recessions government expenditures rise, Federal tax revenues fall, and budget deficits rise. As these deficits are cumulative, the national debt rises as a share of the GDP. These problems became especially severe during the Great Recession. The financial crisis was a protracted affair; the asset market collapses were deep and prolonged. Declines in real housing prices averaged 35% stretched out over six years and equity price collapses averaged 56% over about three and a half years. This was associated with profound declines in output and employment. The unemployment rate rose an average of 7 percentage points during the down phase of the cycle, which lasted on average more than four years. Output declines were more than 9% on average, although the duration of the downturn, averaging roughly two years, was considerably shorter than that of unemployment. The decline in employment was protracted…

Keywords: Austerity; Expansionary Austerity; Housing Bubble; Global Great Recession; Austerity Lobby; Monetary Policy; Fiscal Policy; Incomes Policy; Full Employment; Public Debt; Austerity in Europe; Domestic Inequality; Global Inequality; Economic Growth; Post Keynsesians; John Maynard Keynes; Michal Kalecki; Piero Sraffa; Hyman Minsky; Vita Theory; Trickle-Down Economics; Keynesians; Trickle-Up Economics; Keynesian Economics; Trends in Suicide Rates; Health and The Economy; Alan Greenspan; Ben Benanke; Janet Yellen; Federal Reserve Board; European Central Bank; The Euro (search for similar items in EconPapers)
Date: 2015
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