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Record Debts to Combat Covid-19 Consequences – What Can the State Afford?

Author

Listed:
  • Lars P. Feld
  • Martin Beznoska
  • Oliver Holtemöller
  • Hans-Peter Burghof
  • Ulrike Neyer
  • Clemens Fuest
  • Friedrich Heinemann
  • Thomas König

Abstract

The coronavirus pandemic and the ensuing lockdown are leading to a deep economic crisis worldwide: governments and central banks are responding to the coronavirus crisis by providing vast sums of money to stabilize the economy. As tax revenues collapse, aid for the economy has to be financed by a sharp rise in national debt. At the same time, the central banks are opening their money floodgates. As a result, the states are financing their economic stimulus packages to a considerable extent by printing money; however, the financial conditions for dealing with the economic consequences of the coronavirus pandemic vary greatly among European states. What are the limits of public debt? Will it be possible to reduce public debt to a reasonable level after the crisis?

Suggested Citation

  • Lars P. Feld & Martin Beznoska & Oliver Holtemöller & Hans-Peter Burghof & Ulrike Neyer & Clemens Fuest & Friedrich Heinemann & Thomas König, 2020. "Record Debts to Combat Covid-19 Consequences – What Can the State Afford?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 73(08), pages 03-32, August.
    • Handle: RePEc:ces:ifosdt:v:73:y:2020:i:08:p:03-32
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    References listed on IDEAS

    as
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    1. Scherf, Wolfgang, 2021. "Staatsverschuldung und Globalsteuerung," Finanzwissenschaftliche Arbeitspapiere 106, Justus Liebig University Giessen, Fachbereich Wirtschaftswissenschaften.

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    More about this item

    Keywords

    Öffentliche Schulden; Konjunkturpolitik; Epidemie;
    All these keywords.

    JEL classification:

    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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