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2 years ago

Limits to public debt found to hinder economic growth, study reveals.

Involuntary Unemployment, Inflexible Aggregate Investment, and Limits to Public Debt
Karl Farmer

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This chapter explores if there are limits to how much public debt a country can have in a model of involuntary unemployment. Some economists think that inflexible investment, not just prices, can lead to low demand and unemployment. The study shows that there are indeed limits to how much debt a country can handle, and having too much debt can slow down economic growth. The findings suggest that public debt should be managed carefully to avoid negative effects on the economy.