In Defense of Public Debt
This project will describe and analyze the history of public debt over two millennia. It will argue that the decision to issue and incur public debt is not always and everywhere counterproductive.
This project will develop four themes.
1. Contrary to the impression left by much political debate and journalistic discussion, the decision to issue and incur public debt is not always and everywhere counterproductive.
2. To understand debt dynamics, one must understand the changing purposes to which public debt has been put in the past and the present.
3. In order to understand debt dynamics one must focus on both the financial and political plumbing. By financial plumbing I mean how debt contracts are structured, how debt issues are underwritten and placed, how securities are listed and traded on secondary markets, how restructuring negotiations, where necessary, are organized, and how the whole process is regulated, if at all, by governments or by security market participants themselves. By political plumbing I mean the political arrangements and institutions that lend credibility to a sovereign government’s commitment to service and repay its debts.
4. In historical fact, all debt accumulation episodes do not end in grief.
- “Public Debt through the Ages,” NBER Working Paper no. 25944 (with Asmaa El-Ganainy, Rui Esteves and Kris James Mitchener) (January 2019).
- The Populist Temptation: Economic Grievance and Political Reaction in the Modern Era (Oxford University Press, 2018).
- Globalizing Capital: A History of the International Monetary System (Third Edition, Princeton University Press, 2019).