Blanchard calls for rethink on costs of debt

Fiscal cost of public debt may be zero, macroeconomist argues, but that does not make debt costless

Olivier Blanchard

Economist Olivier Blanchard highlighted the flaws in the dominant debates over the level of government debt in a speech on January 4, arguing in favour of a more nuanced approach.

The MIT professor said his paper reached “strong, and, I expect, surprising, conclusions”. He said in many cases the fiscal costs of governments taking on more debt might be zero or close to zero, and the welfare costs might also be “limited”. But the argument was subject to important caveats.

“My purpose in the

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