Economics Dictionary of Arguments

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Government debt: Government debt, also known as public debt, refers to the accumulated financial obligations a government owes to creditors, individuals, or institutions. It arises from borrowing to finance expenditures exceeding revenues. Represented by bonds or securities, it reflects the total amount the government owes and is a key indicator of a country's financial health and borrowing capacity. See also Government budget, State, Fiscal policy.
Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments.

Author Concept Summary/Quotes Sources

Keynesianism on Government Debt - Dictionary of Arguments

Mause I 235
Government Debt/Keynesianism: if the production potential is already fully exploited, so that higher government spending on goods and services will lead in the long run to lower private spending on goods and services than would be possible without higher government spending, a deficit should be accepted from a Keynesian perspective and expenditure increased to prevent continued weakness in demand and high unemployment.
Def Crowding In: Stimulation of private investment activity through government support for overall economic demand. VsKeynesianism: See Government Debt/Neoclassical Theories.

Mause I 277
Government Debt/Keynesianism: According to Keynesian interpretations, deficits in public budgets during the recession serve as a stimulus to strengthen overall economic demand and thus help to weaken the economic downturn and reduce the extent of involuntary unemployment.
Problem: Multiplying factor: Whether active deficit-spending can fulfil this purpose depends above all on the answer to the empirical question of how high the public spending multiplier is, which provides information on how strong the effect of additional, deficit-financed public spending on gross domestic product is. This question is still controversial today. (1)
In a crisis in the financial and banking sector and in economics with flexible exchange rates the factor seems to be clearly higher. (2)

1. Ethan Ilzetzki, Enrique G. Mendoza, und Carlos A. Végh. 2013. How big (small?) are fiscal multipliers? Journal of Monetary Economics 60 (2): 239– 254.
2. Giancarlo Corsetti und Gernot J. Müller. 2015. Fiscal Multipliers: Lessons from the Great Recession for Small Open Economies. Research Report, Stockholm: Swedish Fiscal Policy Council.

Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments
The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition.
Mause I
Karsten Mause
Christian Müller
Klaus Schubert,
Politik und Wirtschaft: Ein integratives Kompendium Wiesbaden 2018

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