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How might the United Kingdom's debt–GDP ratio be reduced? Evidence from the last 120 years

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  • Michael Wickens

Abstract

This article examines how the currently high level of the UK's debt–GDP ratio can be reduced. We consider whether anything can be learned from previous experience over the last 120 years by examining the contributions both to the increase in the debt–GDP ratio and to the reduction of the debt–GDP ratio by various components of the government budget constraint: the primary surplus, growth, inflation, and interest rates and payments. We also examine the effectiveness of policy in influencing these components. We conclude by considering what level of UK debt might be sustainable and whether this is economically and politically achievable.

Suggested Citation

  • Michael Wickens, 2022. "How might the United Kingdom's debt–GDP ratio be reduced? Evidence from the last 120 years," Economic Affairs, Wiley Blackwell, vol. 42(2), pages 369-384, June.
    • Handle: RePEc:bla:ecaffa:v:42:y:2022:i:2:p:369-384
    DOI: 10.1111/ecaf.12529
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    References listed on IDEAS

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    1. Heer, Burkhard & Polito, Vito & Wickens, Michael R., 2020. "Population aging, social security and fiscal limits," Journal of Economic Dynamics and Control, Elsevier, vol. 116(C).
    2. Michael Wickens, 2012. "Macroeconomic Theory: A Dynamic General Equilibrium Approach Second Edition," Economics Books, Princeton University Press, edition 1, number 9743.
    3. Martin Ellison & Andrew Scott, 2020. "Managing the UK National Debt 1694–2018," American Economic Journal: Macroeconomics, American Economic Association, vol. 12(3), pages 227-257, July.
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