Jump to ContentJump to Main Navigation
Financial and Fiscal PoliciesCrises and New Realities$
Users without a subscription are not able to see the full content.

Y. V. Reddy, Narayan Valluri, and Partha Ray

Print publication date: 2014

Print ISBN-13: 9780199452651

Published to Oxford Scholarship Online: November 2014

DOI: 10.1093/acprof:oso/9780199452651.001.0001

Show Summary Details
Page of

PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 19 September 2021

Public Debt, National Income, and Growth

Public Debt, National Income, and Growth

A Selective Review

(p.227) Chapter 9 Public Debt, National Income, and Growth
Financial and Fiscal Policies

Y.V. Reddy

Narayan Valluri

Partha Ray

Oxford University Press

This chapter presents a literature survey of the economic theories underlying fiscal policy and public debt and its impact on national income and growth. The coverage is particularly focused on the standard theories of the mainstream literature that considers short-run and long-run impact of government deficit and debt. While in the short run increased government expenditure or tax cut would lead to increase in aggregate demand that would raise national income, long-term impact of public debt could entirely be different. The equivalence of debt-financed and tax-financed public expenditure (Barro-Ricardo propositions) is also looked into and the chapter notes its limited relevance in view of its restrictive assumptions. Some insights from the non-mainstream literature, which in general, are more favourably disposed towards fiscal activism, are also covered. Finally, the chapter takes up the recent empirical literature and related controversies following Reinhart and Rogoff’s finding of 90 per cent threshold debt-GDP ratio.

Keywords:   Ricardian equivalence, public debt—long-term impact, public debt—short-term impact, seigniorage, original sin, Reinhart and Rogoff, public debt, government deficit, debt sustainability

Oxford Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs , and if you can't find the answer there, please contact us .