Public Debt - Public policy or Macroeconomics?
When you consider the public debt, do you regard it as a public policy issue or macroeconomic issue?
Sorry I was asked this question in class today and I made a convincing argument for it being a economic issue but I was told I was wrong.
May not be the best place to ask this question but you guys seem an intelligent bunch!
Thanks
Do you mean 'what drives the issuance of government debt' (public policy or macroeconomic trends) or do you mean 'is government leverage a public policy issue or an economic issue'?
No I mean controlling public debt. Can a convincing argument be made that it is a public policy issue?
Depending on how you frame the question, it could go either way. Currently, public debt is most definitely macroeconomic policy. This is the whole premise that keynesian theory is built on; its simply a tool of fiscal policy.
The only way I could see it as public policy is if governments didn't go into debt to influence the economy, but to temporarily finance budget shortfalls.
Well the issue in class was what area of public affairs would I seek to address and with the constant emphasis on debt, it was mentioned by another student as something they would change. But I was confused, thinking it was certainly fiscal policy and nothing public policy can really address due to market forces but was told it can be addressed.
The explanation I got I didnt understand all that well. But predictably an assignment has come out of it. How would I suggest this is a public policy matter and can be addressed?
Any thoughts anyone?
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