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Public Debt and Price Stability

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  • Carl Christian von Weizsäcker

Abstract

type="main" xml:id="geer12030-abs-0001"> Modernized Austrian capital theory implies: in capital market equilibrium without public debt the average period of production equals the average waiting period of households. In the twenty-first century and for the OECD plus China area, demographic and production parameters are such that capital market equilibrium implies a negative real rate of interest. Price stability implies a non-negative real rate of interest. Prosperity requires capital market equilibrium. Thus, positive public debt is required for price stability under conditions of prosperity. Some conclusions are drawn for actual international macropolicy.

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  • Carl Christian von Weizsäcker, 2014. "Public Debt and Price Stability," German Economic Review, Verein für Socialpolitik, vol. 15(1), pages 42-61, February.
    • Handle: RePEc:bla:germec:v:15:y:2014:i:1:p:42-61
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    File URL: http://hdl.handle.net/10.1111/geer.2014.15.issue-1
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    Cited by:

    1. Stefan Homburg & Julia Knolle, 2017. "Das Rätsel der Niedrigzinsphase [The Conundrum of Low Interest Rates]," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 97(4), pages 290-293, April.
    2. Stefan Homburg, 2017. "Understanding Benign Liquidity Traps: The Case of Japan," German Economic Review, Verein für Socialpolitik, vol. 18(3), pages 267-282, August.
    3. Gebhard Kirchgässner, 2014. "On the Process of Scientific Policy Advice - With Special Reference to Economic Policy," CESifo Working Paper Series 5144, CESifo.
    4. Agnieszka Gehringer & Thomas Mayer, 2019. "Understanding low interest rates: evidence from Japan, Euro Area, United States and United Kingdom," Scottish Journal of Political Economy, Scottish Economic Society, vol. 66(1), pages 28-53, February.
    5. von Weizsäcker Carl Christian, 2015. "Kapitalismus in der Krise?," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 16(2), pages 189-212, June.

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