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Government Debt and Nominal GDP in the Great Recession: All Intentional?

Riccardo Fiorito*,
University of Siena and Gerson-Lehrman Group, New York


Expansionary fiscal policies surely contributed to increase gov-ernment debt during last crisis. In the OECD area, however, the resulting jump in the Debt-to-GDP ratio was not only due to extra public spending; another cause for debt ratio increase — regardless of fiscal policies — was the unusual nominal recession mostly occurred in 2009 which introduced a new asymmetry in the ratio. The sources of the debt ratio increase occurred during the 2008-13 crisis and the years 2000-07 are evaluated — using a simple accounting scheme — in the US, the UK and the four biggest Eurozone countries.

[JEL Classification: H63; E31; F44].

Keywords: sovereign debt; inflation, international business cycles.



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*
rfiorito@iol.it, Without implications, I am grateful to Christopher Emsden, Lorenzo Pecchi and John Seater for valuable comments and hints.
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