Rogoff versus Blanchard on Public Debt
“My Stiglitz days are over”- Rogoff
Interesting conference from the Fund focused on public debt — Twentieth Jacques Polak Annual Research Conference — Debt: The Good. The Bad. The Ugly.
The discussion between Rogoff and Blanchard moderated by Gita Gopinath, IMF Chief Economist is highly recommended.
Related:
Sovereign Debt: A Guide for Economists and Practitioners
The link between debt accumulation and investment is even less clear. A simple regression that controls for country- and year-fixed effects shows a positive correlation between the debt-to-GDP ratio and public investment in advanced economies, implying that a 1 percentage point change in the debt-to-GDP ratio is associated with a 0.04 percentage point increase in public investment (Figure 3.2). This suggests that, typically, only a small percentage of debt issuance (4 percent) is used to finance public investment projects.
Fiscal Policy in a Depressed Economy