Does Debt Management Matter?

This third volume from the Swedish Trade Union Institute for Economic Research, FIEF, looks at the problems of debt management. In the mid-1970s, after the first oil crisis, many countries began to run larger deficits on government budgets than earlier during the postwar period. This growth of government debt has occurred concomitantly with a development, liberalization, and sophistication of capital markets. In fact, these latter events have probably been a prerequisite for the growing government indebtedness. The growth of public debt has stimulated the interest of academic economists. In recent years there has been a discussion of the debt burden of underdeveloped countries and the neutrality of total government debt in more advanced economies. However, the possible effects of the management of a given debt on real capital formation via portfolio crowding-out or crowding-in has been relatively neglected. This is why this volume is fully devoted to the subject of debt management, focusing particularly on how debt management influences the financial sector and elements of the "real" economy such as output, capital formation, and consumption.