Public debt can have longterm implications for an economy from "summary" of Public Finance by Harvey S. Rosen
Public debt, or the accumulation of government borrowing over time, is a topic of great importance in public finance. It is a concept that has significant implications for the long-term health of an economy. When a government decides to borrow money by issuing bonds, it essentially commits future generations to repay those debts, with interest. This can lead to a cycle of increasing debt, as interest payments pile up and new borrowing is needed to cover existing obligations. Over time, this can create a burden that stifles economic growth and limits the government's ability to respond to unforeseen events or crises. One of the main long-term implications of public debt is the crowding out effect. When a government borrows large amounts of money, it competes with private borrowers for available funds. This can lead to higher interest rates, ...Similar Posts
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