High Public Debt in an Uncertain World: Post-Covid-19 Dangers for Public Finance

Daniel Gros

No 38, EconPol Policy Brief from ifo Institute - Leibniz Institute for Economic Research at the University of Munich

Abstract: Key messages: High debt ratios represent a danger, even if interest rates are low. The key reason is increased uncertainty of growth prospects in a post-Covid economy coupled with and uncertainty with regard to the probability of future large shocks. Large negative shocks are more frequent than assumed in standard models. Another reason is that the cost of public debt might increase more than linearly as the debt ratio rises. Large negative shocks create much more problems when debt is already high.

Date: 2021
New Economics Papers: this item is included in nep-ban and nep-cwa
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.ifo.de/DocDL/EconPol_Policy_Brief_38_Public_debt_uncertain_world.pdf (application/pdf)

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:ces:econpb:_38

Access Statistics for this paper

More papers in EconPol Policy Brief from ifo Institute - Leibniz Institute for Economic Research at the University of Munich Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().