Extra Government Debt in the Great Recession: All Intentional?

Among the Great Recession costs there was the adoption of fiscal policies, generally bounded to increase government debt. In the Oecd area, however, the resulting debt jump was not simply due to counter-cyclical discretion, mostly because of two reasons: the first is that such policies were not always feasible, given the surveillance on the Eurozone countries. The second is the occurrence of an unusual nominal recession, increasing the debt-to-GDP ratio and affecting most Oecd economies in 2009 and the Euro periphery also later. Using a simple accounting scheme, the sources of the debt creation are evaluated during the 2008-13 crisis and the years immediately before (2000-07), comparing the US and the UK with the four biggest Eurozone countries. In general, deficits, inflation and real growth do not have the same role before or during the crisis. Differences are also found for countries pursuing, in special times, more counter-cyclical fiscal policies (US, UK but also Spain and France) and countries like Italy and, especially, Germany following more prudential lines: in one case, because of Italy’s limited fiscal space and, in the other, because of a predilection for stability that Germany maintained even during the most destabilizing, postwar, crisis