Staatsverschuldung und Geldpolitik: Wege aus der Krise

Abstract

Abstract We discuss the risks of high public debt in the aftermath of the Covid-induced economic downturn. Historically low interest rates can tempt governments to expand public debt to excessive levels, since the immediate budgetary consequences are small. But once interest rates rise again, governments may be forced to either conduct painful debt consolidation, default on at least part of their debt, or allow high inflation, at the potential cost of hyperinflation. Because financial market participants may doubt policy makers‘ commitment to servicing the public debt, a high level of debt carries the risk of self-fulfilling debt crises. We stress that new debt should always be associated with growth-enhancing policies that expand the government’s resources, thus reducing the need for painful consolidation and distributional conflict later on.