Public debt
A country's national debt - also known as its public debt - is a matter of economic and political significance. It has often been the subject of controversy, and some have considered it to have moral significance.
Definition
The OECD's broad definition of public debt as "the external obligations of the government and public sector "[1] is in general use, but national definitions [2] differ in detail [3]and produce figures that may not be comparable. The European Union's definition embodied in its Stability and Growth Pact[4] of "General Government Gross Debt"[5] differs in detail from the complete OECD definition.
Overview
It is customary in normal times for governments to use borrowing to finance investment, and it is current practice for the main industrialised countries to allow national debt to accumulate to between 40 and 60 per cent of GDP (except Japan and Italy, with percentages of over 100). It is also normal practice for governments to allow national debt to rise to between 70 to 100 per cent of GDP during major recessions - as a result, mainly of the operation of their economies' automatic stabilisers, but also from the use of fiscal stimuluses, intended to compensate for reductions in private sector spending.
Sources of debt
International comparisons
Economic consequences
History
Rules
References
- ↑ Public Debt, OECD Glossary of Statistical Terms
- ↑ For the US definition ses the Treasury Department guide [1].
For the UK definition, see the ONS guide [2] - ↑ Understanding Government Debt Statistics, Economicshelp.org
- ↑ Stability and Growth Pact, OECD Glossary of Statistical Terms
- ↑ General Government Gross Debt (Maastricht Definition), OECD Glossary of Statistical Terms