Financial Integration and the Growth of Public Debt

We show that in the overlapping generations model, global financial integration may lead to higher levels of public debt by externalizing its crowding-out effect.

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Mark Roberts (University of Nottingham)

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IWH conference room

Programm

We show that in the overlapping generations model, global financial integration may lead to higher levels of public debt by externalizing its crowding-out effect. Another implication is that cross-country studies will understate the negative effect of public debt on economic growth if debt markets are globally integrated.