This paper examines contrasting experiences of the United Kingdom in addressing high public debt to GDP ratios following major wars. A clear message is that interest rate / growth rate differentials were more important than primary budget surpluses for the different outcomes. The debt to GDP ratio fell very rapidly under financial repression following the Second World War but remained stubbornly high despite large budget surpluses with price deflation after the First World War. Implications for policymakers today are that averting price deflation is a high priority and that supply-side policies that raise growth could play an important part in debt reduction.
Authors
Nicholas Crafts
Journal article details
- DOI
- 10.1111/j.1475-5890.2015.12064
- Publisher
- Wiley
- JEL
- H63;N14
- Issue
- June 2016
Suggested citation
Crafts, N. (2016). 'Reducing High Public Debt Ratios: Lessons from UK Experience' (2016)
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