There was an error in this gadget

Friday, February 26, 2010

Is anyone changing the paradigm on acceptable public debt?

I wonder about public debt and debt to GDP. As we all know, public authorities have been either borrowing money- internally or externally- cutting taxes to spur the economy, spending money on public works in attempt to do the same or have been having decreasing revenues due to the fall off in public taxation- because folks, simply, do not have it to pay.

However, what debt ceiling is "really" acceptable? To me, from the works I have read from Desbonnete and Ayagari- the former from the Sorbonne in France and the other, is a former, deceased, Federal Reserve Executive and Professor at NYU, it is all a mixed bag.

Through their works they have tried to expound on public debt and debt to GDP, as a form of a standardization of the exact amount or debt as a function of the state as it relates to inflation and deficits- particularly with Ayagari. Desbonnet, particularly, focuses on aggregate risk as a function of increasing public debt- but examines it from a policy choice and preference standpoint, as it relates to how policy makers make decisions about increasing public debt as it relates to that risk.

However, while inflation is a concern, what about thinking about public debt in discretionary terms. Not merely as a function of welfare spending to stave off a recession or bring an economy out of a recession. But, public debt, as a form of social optimization as well as examining public debt, in the manner of social optimization and with the parameters of the related service expenditure to spend on public debt- i.e., the maintenance, monitoring and processing of public debt related agencies.

Maybe I'm just blowing smoke. But, I think it would be interesting to examine.
Post a Comment