Gaspar, Vitor, Escolano, Julio, (2016), “An Argument for Paying Down Public Debt”, iMFdirect, 26 Αugust
What should governments do about high public debt-to-GDP ratios? This question is getting much-deserved attention. Let’s abstract from macroeconomic (business cycle) considerations and look at the issue purely from an optimal tax smoothing perspective—that is, weighing the cost and benefits of raising taxes to pay down debt. By doing so we decidedly do not engage in the current debate about the contribution that fiscal policy may make to demand management.
Relevant Posts
- Arellano, Cristina, Atkeson, Andrew, Wright, Mark, (2016), “External and Public Debt Crises”, NBER Macroeconomics Annual, Volume 30 Number 1
- Battaglini, Marco, Nunnari, Salvatore, Palfrey, Thomas R, (2016), “The Political Economy of Public Debt: A Laboratory Study”, Centre for Economic Policy Research, June