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Entrepreneur, Technology transfer, Gender differences, Venture capital, Scientific productivity, O31, O34, O38, J44, J71,

We examine how the composition of public debt, broken down by currency, maturity, holder profile and marketability, has responded to major debt accumulation and consolidation episodes during 1900-2011. Covering thirteen advanced economies, we focus on debt structure shifts that occurred around the two World Wars and global economic downturns, and the subsequent debt consolidations. Notwithstanding data gaps, we are able to recover some broad common patterns. Episodes of large debt accumulation-essentially, large increases in debt supply-were typically absorbed by increases in short-term, foreign currency-denominated, and banking-systemheld debt. However, this pattern did not hold during the debt build-ups starting in the 1980s and 1990s, which were compositionally skewed toward long-term local-currency debt. We attribute this change to higher structural demand for sovereign paper, linked to capital account liberalization in advanced economies, the emergence of a large contractual saving sector, and innovative sovereign debt products. With regard to debt consolidations, we find support for the financial repression-cum-inflation channel for post World War II debt reductions. However, the scope for a repeat of this strategy appears limited unless financial liberalization and globalization were materially rolled back or the current globally agreed monetary policy regime built around price stability abandoned. Neither are significant favorable structural demand shifts, as witnessed in the 1980s and 1990s, likely.

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One of the main rationales for taxing consumption rather than income is that it is believed that consumption taxes discourage consumption, encourage savings, and thus generate higher economic growth. However, empirical evidence on the actual effectiveness of consumption taxes in stimulating savings is very limited. In this paper, we estimate the impact of a broad-based consumption tax, the value-added tax (VAT), on the aggregate consumption of fifteen European Union countries over the period 1961-2005. Our empirical results indicate, across a variety of estimation methods and specifications, that a one percentage point increase in the VAT rate leads to roughly a one percent reduction in the level of aggregate consumption in the short run and to a somewhat larger reduction in the long run.

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Public debts have exploded to levels unprecedented in recent history as governments responded to the COVID-19 pandemic. These rising levels of debt prompted apocalyptic warnings about the dangers of heavy debts—about the drag they will place on economic growth and the burden they impose on future generations. This book adds the other side of the equation: drawing on history, the authors provide a defense of public debt. Their account shows that the ability of governments to borrow has played a critical role in meeting emergencies, from wars and pandemics to economic and financial crises, as well as in funding essential public goods and services such as transportation, education, and healthcare. In these ways, the capacity to issue debt has been integral to state building. Transactions in public debt securities have also contributed to developing private financial markets and, through this channel, to economic growth. None of this is to deny that debt problems, debt crises, and debt defaults occur. But these dramatic events, which attract much attention, are not the entire story. In Defense of Public Debt redresses the balance. The book develops its arguments historically, recounting two millennia of public debt experience. It deploys a comprehensive database to identify the factors behind rising public debts and the circumstances under which high debts are successfully reduced. Finally, it brings the story up to date, describing the role of public debt in managing, from 2020 onward, the COVID-19 pandemic and suggesting a way forward once governments, now more heavily indebted than before, finally emerge from the crisis.

No abstract