Capitol Report: Debt-ridden countries facing weak growth should spend, Jackson Hole study argues

The United States would have to reduce non-interest spending or increase revenues by over 9% of GDP relative to baseline projections in order to hit its current debt-to-GDP ratio in 2050.

Countries growing weakly shouldn’t be reluctant to invest to stimulate growth even if they are racked with high levels of debt, according to a paper presented at the Kansas City Fed conference in Jackson Hole.

The paper, from the University of California, Berkeley’s Alan Auerbach and Yuriy Gorodnichenko, comes as countries including the United States are still debating what should be done in light of the weak growth in the wake of the Great Recession.

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