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The Janus of Debt
With the US again flirting with a default crisis as Republicans balk at raising the national debt ceiling, and with government debt levels everywhere reaching new highs following COVID-19, questions about the proper role of debt have returned. The truth seems to be that sustainability of government borrowing is as much about politics as economics.
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Barry Eichengreen, Asmaa El-Ganainy, Rui Esteves, and Kris James Mitchener, In Defense of Public Debt, Oxford University Press, 2021.
Ludger Schuknecht, Public Spending and the Role of the State: History, Performance, Risk and Remedies, Cambridge University Press, 2020.
Tobias Straumann, 1931: Debt, Crisis, and the Rise of Hitler, Oxford University Press, 2019.
Adam Tooze, Shutdown: How Covid Shook the World’s Economy, Viking, 2021.
PRINCETON – Debt is back in the headlines. The COVID-19 pandemic has compelled an enormous expansion of public borrowing, and odd fiscal rules setting a ceiling on government debt in the United States have left that country flirting once again with the possibility of sovereign default.