PUBLIC debt in rich countries exploded between 2007 and 2012, rising from an average of 53% of GDP to nearly 80%. Some people think this is a problem, and say that governments need to do their best to cut it. But that view has been challenged in a new paper from the International Monetary Fund, which suggests that “paying down the debt” (or in the words of George Osborne, Britain's chancellor of the exchequer, “fixing the roof while the sun is shining”) is not the most sensible approach.
The IMF's economists reckon that if a government could choose between having high or low debt today, then all else equal they would (and should) choose the latter. After...Continue reading
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