When Should Public Debt Be Reduced?

Ostry, Jonathan D.; Ghosh, Atish R.; Espinoza, Raphaël

doi:10.5089/9781498379205.006

Cited by 72 publications

(68 citation statements)

References 14 publications

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“…In June 2016, following previous research notes that questioned the economic 'threat' of national debt (e.g. Ostry et al, 2015), the Deputy Director and Division Chief within the IMF's Research Department condemned with faint praise and stark evidence over thirty years of IMF neoliberal-inspired economic and social policy (Ostry et al, 2016). Two core elements of the neoliberal project in particular were identified as problematic: the rapid removal of restrictions on capital movement and the pursuit of austerity.…”

Section: Dreaming On: the International Monetary Fundmentioning

confidence: 99%

Austerity: Neoliberal dreams come true?

Farnsworth

Irving

2018

Critical Social Policy

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Please cite original, full and proofed article. AbstractThe 2008 global economic crisis paved the way for the construction of a new, elite-driven, capitalcentric, shrunken welfare state project founded on ideology disguised as pragmatism and objective 'truths'. Today, welfare states exist in a context in which a new politics of austerity sets the parameters of the debate. Austerity incorporates the neoliberal desire to shrink the (social welfare) state, deregulate labour markets and emphasise private markets as the drivers of growth, enabling a reconfiguration of the interests of capital, the needs of people and the role of the state. The new politics of austerity looks like a 'dream come true' for neoliberals. Or is it? There is also a powerful counter-narrative that suggests that the global crisis exposed the fundamental weaknesses and limitations of neoliberalism and forced policy makers to question core principles and change direction. Focusing on the International Monetary Fund (IMF), perhaps the preeminent global neoliberal interlocutor, and using quantitative textual analysis, the article locates some evidence of movement, but little to suggest that the fundamental assumptions of neoliberalism have been displaced.

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Section: Dreaming On: the International Monetary Fundmentioning

confidence: 99%

Austerity: Neoliberal dreams come true?

Farnsworth

Irving

2018

Critical Social Policy

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“…These results suggest that fiscal automatic stabilisers are important for dampening the effect of foreign shocks. The result for the government debt to GDP may appear puzzling because it could be expected that a higher debt actually reduces the fiscal space and may hence increase the spill-over, but government debt may simply not be a good measure of the fiscal space (see, e.g., Ostry et al 2015). …”

Section: Receiving Country Characteristicsmentioning

confidence: 99%

Trade, finance or policies: What drives the cross-border spill-over of business cycles?

Montinari

Stracca

2016

Journal of Macroeconomics

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“…For the first set of authors, the most serious failure of the work of Reinhart and Rogoff [20] is that they analyze correlation between public debt and growth, but not causation, particularly to demonstrate that there is a causal link between these variables and the relationship running from low economic growth to public borrowing. Herndon et al [22] completely discredit the work of Reinhart and Rogoff [20] to demonstrate that these authors made mistakes in coding, the selective exclusion of the evidence, and weighting in a non-conventional form their summary statistics, so it is not confirmed that there is a threshold of debt from which economic growth is reduced; in fact, it can be considered that the relationship between these variables depends on the period and analyzed country (also see Pescatori et al [23] and Ostry et al [24]). …”

Section: (3)mentioning

confidence: 99%

Public Debt, Public Investment and Economic Growth in Mexico

Juárez¹,

García-Almada²

2016

IJFS

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Abstract:The primary objective of this article is to answer the following two research questions: has the growing public debt of state governments promoted increased public investment? If the answer is yes, then does any increase in public investment lead to more growth in the Mexican states? Dynamic Models of panel data and the Generalized Method of Moments, with information for 32 states from 1993 to 2012, were used for this purpose. The econometric results confirmed that public debt is positively correlated with public investment and that this in turn generates economic growth. This does not mean that a good economic policy strategy has been followed, since the marginal positive impact of public investment, and therefore the public debt on the production per person, is reduced (1% increase in the interaction between public investment and public debt variable causes a 0.0005% increase in economic growth). This suggests deviations from the debt contracted for purposes other than production, which could lead to a situation of unsustainability of state public finances in the medium term.

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When Should Public Debt Be Reduced?

Cited by 72 publications

References 14 publications

Austerity: Neoliberal dreams come true?

Austerity: Neoliberal dreams come true?

Trade, finance or policies: What drives the cross-border spill-over of business cycles?

Public Debt, Public Investment and Economic Growth in Mexico

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