Sunday, August 04, 2019

Baker's dozen

A Baker’s Dozen of Reasons Not to Worry about Government Debt

Real-economy arguments for more public borrowing:
  1. The economy generally operates below potential
  2. There are long run forces pushing down demand
  3. Potential output is mismeasured; we are still well below it
  4. Recessions and jobless recoveries have occurred repeatedly in past, will occur again in the future
  5. Monetary policy is not effective at maintaining full employment
  6. It’s hard to ramp up public spending quickly in recession
  7. The costs of getting demand wrong are not symmetrical
  8. Weak demand may have permanent effects on potential output

Financial arguments for more public borrowing:
  1. With low interest rates, debt does not snowball
  2. There is good reason to think interest rates will remain low
  3. With hysteresis, higher public borrowing can pay for itself
  4. Federal debt is an important asset for financial markets
  5. Federal debt is an important asset for the rest of the world

No comments:

Post a Comment

Please pick a handle or moniker for your comment. It's much easier to address someone by a name or pseudonym than simply "hey you". I have the option of requiring a "hard" identity, but I don't want to turn that on... yet.

With few exceptions, I will not respond or reply to anonymous comments, and I may delete them. I keep a copy of all comments; if you want the text of your comment to repost with something vaguely resembling an identity, email me.

No spam, pr0n, commercial advertising, insanity, lies, repetition or off-topic comments. Creationists, Global Warming deniers, anti-vaxers, Randians, and Libertarians are automatically presumed to be idiots; Christians and Muslims might get the benefit of the doubt, if I'm in a good mood.

See the Debate Flowchart for some basic rules.

Sourced factual corrections are always published and acknowledged.

I will respond or not respond to comments as the mood takes me. See my latest comment policy for details. I am not a pseudonomous-American: my real name is Larry.

Comments may be moderated from time to time. When I do moderate comments, anonymous comments are far more likely to be rejected.

I've already answered some typical comments.

I have jqMath enabled for the blog. If you have a dollar sign (\$) in your comment, put a \\ in front of it: \\\$, unless you want to include a formula in your comment.