October 1, 2025

In Defense of Public Debt

Key Points

Public debt plays a vital role in mobilizing resources during national emergencies, enhancing economic resilience.
The recent issuance of public debt in response to the COVID-19 pandemic illustrates its potential benefits.
Debate around debt consolidation highlights the need for effective management as global interest rates rise.
Addressing public debt challenges will be essential for governments in the post-pandemic economic landscape.

Abstract

I offer a balanced view of the benefits and risks of public debt issuance. The role of public debt in mobilizing resources to meet national emergencies is a historical constant, most recently illustrated by the response to the COVID-19 pandemic. But this emergency response also leaves a legacy. I reflect on the prospects for debt consolidation and on how governments should meet the challenge of managing public debt now as we enter a period of higher global interest rates. JEL classification: N1 ; G1

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In Defense of Public Debt

Key Points

Abstract

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