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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Authors
Barry Eichengreen
Vienna University of Economics and Business
Journals
E
Ensayos Económicos
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