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Reducing High Public Debt Ratios: Lessons from UK Experience

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  • Nicholas Crafts

Abstract

This paper examines contrasting experiences of the United Kingdom in addressing high public debt to GDP ratios following major wars. A clear message is that interest rate/growth rate differentials were more important than primary budget surpluses for the different outcomes. The debt to GDP ratio fell very rapidly under financial repression following World War II but remained stubbornly high despite large budget surpluses with price deflation after World War I. Implications for policymakers today are that averting price deflation is a high priority and that supply-side policies that raise growth could play an important part in debt reduction.
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Suggested Citation

  • Nicholas Crafts, 2016. "Reducing High Public Debt Ratios: Lessons from UK Experience," Fiscal Studies, Institute for Fiscal Studies, vol. 37, pages 201-223, June.
  • Handle: RePEc:ifs:fistud:v:37:y:2016:i::p:201-223
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    References listed on IDEAS

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    Cited by:

    1. Ellison, Martin & Scott, Andrew, 2017. "Managing the UK National Debt 1694-2017," LSE Research Online Documents on Economics 86148, London School of Economics and Political Science, LSE Library.
    2. FitzGerald, John & Kenny, Seán, 2018. "Managing a Century of Debt," Lund Papers in Economic History 171, Lund University, Department of Economic History.
    3. John Fitzgerald & Seán Kenny, 2017. "‘Till Debt Do Us Part’:Financial Implications of the Divorce of the Irish Free State from the UK, 1922-6," Trinity Economics Papers tep2117, Trinity College Dublin, Department of Economics.

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