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Public Debt: Fiscal and Welfare Costs in a Time of Low Interest Rates


  • Olivier J Blanchard

    () (Peterson Institute for International Economics)


In his presidential address to the American Economic Association in early January, Olivier Blanchard explored the costs and benefits of public debt in the current environment of low interest rates. In this Policy Brief, he first summarizes his argument; he then addresses a number of objections to his conclusions and considers the practical fiscal policy implications.

Suggested Citation

  • Olivier J Blanchard, 2019. "Public Debt: Fiscal and Welfare Costs in a Time of Low Interest Rates," Policy Briefs PB19-2, Peterson Institute for International Economics.
  • Handle: RePEc:iie:pbrief:pb19-2

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    Cited by:

    1. Günter Coenen & Carlos Montes-Galdón & Frank Smets, 2019. "Effects of State-Dependent Forward Guidance, Large-Scale Asset Purchases and Fiscal Stimulus in a Low-Interest-Rate Environment," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 19/983, Ghent University, Faculty of Economics and Business Administration.
    2. Gilles Dufrénot & Carolina Ulloa Suarez, 2019. "Public finance sustainability in Europe: a behavioral model," Working Papers halshs-02356400, HAL.
    3. Clemens Fuest & Christa Hainz & Volker Meier & Martin Werding & Giacomo Corneo & Hans Peter Grüner & Dennis Huchzermeier & Bert Rürup & Andreas Knabe & Joachim Weimann & Christine Bortenlänger & Donat, 2019. "Staatsfonds für eine effiziente Altersvorsorge: Welche innovativen Lösungen sind möglich?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 72(14), pages 03-24, July.
    4. Lorenzo Esposito & Giuseppe Mastromatteo, 2019. "Defaultnomics: Making Sense of the Barro-Ricardo Equivalence in a Financialized World," Economics Working Paper Archive wp_933, Levy Economics Institute.
    5. Antonio Fatás & Atish R. Ghosh & Ugo Panizza & Andrea F Presbitero, 2019. "The Motives to Borrow," IMF Working Papers 19/101, International Monetary Fund.
    6. Andersson, Fredrik N. G. & Jonung, Lars, 2019. "The Swedish Fiscal Framework – The Most Successful One in the EU?," Working Papers 2019:6, Lund University, Department of Economics.
    7. Schuknecht, Ludger, 2019. "Fiscal-financial vulnerabilities," SAFE White Paper Series 62, Leibniz Institute for Financial Research SAFE.
    8. D. Cornille & H. Godefroid & L. Van Meensel & S. Van Parys, 2019. "How risky is the high public debt in a context of low interest rates ?," Economic Review, National Bank of Belgium, issue ii, pages 70-96, September.
    9. Heikki Oksanen, 2019. "Reforming the Euro Pragmatically: Towards Sustainable Fiscal Policy and a Revamped Eurosystem," CESifo Working Paper Series 7912, CESifo Group Munich.
    10. Robert Rowthorn, 2019. "Keynesian Economics - Back from the Dead? The Godley-Tobin Lecture," Working Papers wp512, Centre for Business Research, University of Cambridge.
    11. David Kiefer, Ivan Mendieta-Munoz, Codrina Rada, Rudiger von Arnim, 2019. "Secular Stagnation and Income Distribution Dynamics," Working Paper Series, Department of Economics, University of Utah 2019_05, University of Utah, Department of Economics.
    12. Colvin, Christopher L. & Winfree, Paul, 2019. "Applied history, applied economics, and economic history," QUCEH Working Paper Series 2019-07, Queen's University Belfast, Queen's University Centre for Economic History.
    13. Jaime Terceiro Lomba, 2019. "The energy transition and the financial system," Revista de Estabilidad Financiera, Banco de España;Revista de Estabilidad Financiera Homepage, issue Autumn.
    14. Gilles Dufrénot & Carolina Ulloa Suarez, 2019. "Public finance sustainability in Europe: a behavioral model," AMSE Working Papers 1929, Aix-Marseille School of Economics, France.
    15. Dmitriy Stolyarov & Linda L. Tesar, 2019. "Interest Rate Trends in a Global Context," Working Papers wp402, University of Michigan, Michigan Retirement Research Center.
    16. El-Shagi, Makram & von Schweinitz, Gregor, 2019. "Fiscal policy and fiscal fragility: Empirical evidence from the OECD," IWH Discussion Papers 13/2019, Halle Institute for Economic Research (IWH).
    17. Spahn, Peter, 2019. "Keynesian capital theory: Declining interest rates and persisting profits," Hohenheim Discussion Papers in Business, Economics and Social Sciences 10-2019, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    18. Gunther Tichy, 2019. "Das vernachlässigte Massensparen. Die wirtschaftspolitischen Folgen zunehmender Intermediation," WIFO Monatsberichte (monthly reports), WIFO, vol. 92(8), pages 583-597, August.
    19. Hüther, Michael, 2019. "10 Jahre Schuldenbremse: Ein Konzept mit Zukunft?," IW policy papers 3/2019, Institut der deutschen Wirtschaft (IW) / German Economic Institute.
    20. Guillaume Cléaud & Francisco de Castro Fernández & Jorge Durán Laguna & Lucia Granelli & Martin Hallet & Anne Jaubertie & Carlos Maravall Rodriguez & Diana Ognyanova & Balazs Palvolgyi & Tsvetan Tsali, 2019. "Cruising at Different Speeds: Similarities and Divergences between the German and the French Economies," European Economy - Discussion Papers 2015 - 103, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.

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