In this compact and easy-to-follow mini course, you will learn some very basics about public debt dynamics and the challenges of fiscal consolidation.
The course is by no means meant to be exhaustive, but we hope that by the end of the course you will have learned something about the following:
- Simple definition and decomposition of public debt
- Key macroeconomic determinants of public debt dynamics
- A basic understanding about the challenge of fiscal consolidation, especially regarding:
- the impact of unforeseen economic disruptions (economic “shocks”) on deficits and debt
- macroeconomic feedbacks of fiscal policy
- cyclical feedbacks on deficits and public debt
In all of this, we will try to always give you a chance to look at the actual data. We hope that this will get you some intuition about what public debt levels look like in various countries historically and at the current moment and how they relate to broader macroeconmic developments. You will also be able to create simple scenarios. Keep in mind, however, that these scenarios are for illustrative purposes only, as they contain many strong simplifications. They should not be confused with actual projections.1 However, we hope that they help you gain a more intuitive understanding of the current debates and projections on fiscal policy and public debt.
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This mini course is licensed to you under Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.