Opinion
Nations are loading up on debt, but how much is too much?
Nobody would be arguing for austerity right now. But public spending cannot be based on magical monetary thinking.
Raghuram RajanEconomics professorAs the COVID-19 pandemic rages, governments in advanced economies have opened their coffers to support households and small businesses, spending on the order of 15 per cent-20 per cent of GDP in many cases. Cumulative debt levels now exceed GDP in many developed countries; and, on average, debt as a share of GDP is approaching post-World War II highs.
Nonetheless, according to Olivier Blanchard and other economists, advanced economies can afford to take on much more debt, given the low level of interest rates.
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