How Much Do We Value Future Generations? Climate Change, Debt, and Attitudes towards Policies for Improving Future Lives

Do people care much about future generations? Moral philosophers argue that we should, but it is not clear that laypeople agree. Humanity’s thus-far inadequate efforts to address climate change, for example, could be taken as a sign that people are unconcerned about the well-being of future generations. An alternative explanation is that the lack of action is due to public scepticism about climate policies’ effectiveness, rather than the discounting of future lives per se. Based on surveys and survey experiments with representative samples of respondents in four countries—Sweden, Spain, South Korea, and China—we find that most people say they care about future generations, and would even be willing to reduce their standard of living so that people can enjoy better lives in the future. Many do not, however, support policies for reducing either global warming or the national debt—both of which would impose a net cost on current generations for the benefit of future generations. We show that a significant part of the public’s apparent lack of concern for future generations is actually due to disbelief or distrust in the likely benefits of government actions.

Debt to GDP Ratio from the Perspective of MMT

In this note we examine the debt to GDP ratio from the perspective of MMT (Modern Monetary Theory) by a simple macroeconomic model with savings by government bonds instead of money. Mainly we will show the following results. 1) In order to maintain full employment under economic growth, the budget deficit, including interest payments on government bonds, must be positive; and if the budget deficit is smaller than this value, there will be recession with involuntary unemployment. 2) Under full employment the debt to GDP ratio approaches to a finite value over time. 3) In the underemployment case the national income is determined by the budget deficit. 4) The excessive budget deficit causes inflation. 6) In order to recover full employment from recession we need budget deficit larger than that when full employment is maintained. 5) The budget deficit, including interest payments on government bonds, equals the increase of the savings of consumers between periods (generations); and this result holds whether we have full employment or not, whether we have inflation or not. Then, the ratio of the national debt to GDP in a period is smaller than one, and even if one period constitutes of several years, the debt to GDP ratio in a year is finite.

Economy of the Neighborhood Belt Countries in the Context of the COVID-19 Pandemic and Peculiarities of Post-Crisis Recovery

Aim. The presented study aims to identify key factors affecting the macroeconomic situation in the EAEU countries and Tajikistan (hereinafter referred to as the region) in the context of the COVID-19 pandemic.Tasks. This study summarizes trends in the development of the neighborhood belt countries in recent years; investigates changes in the real, monetary, fiscal, and external sectors of the economies caused by the spread of COVID-19; identifies the vulnerability factors of the countries in the region and key trends in responding to the crisis and post-crisis recovery.Methods. To investigate the effects of the COVID-19 pandemic on the macroeconomic situation in the neighborhood belt countries, the authors analyze the dynamics of major macroeconomic indicators characterizing the state of the real, monetary, external, and fiscal sectors of the economies under consideration.Results. The macroeconomic situation in the neighborhood belt countries at the beginning of the COVID-19 pandemic and during the post-crisis recovery is largely similar. The effects of the pandemic include sharp depreciation of national currencies, increased budget deficits, and increased national debt. Post-crisis recovery in the region is characterized by persistent risks to fiscal and debt sustainability and the effect of pro-inflationary factors.Conclusions. Despite the consistent post-crisis recovery of the neighborhood belt countries, sustainable growth is still threatened by the possible deterioration of the epidemiological situation, national budget deficit, high level of national debt, and increasing inflationary pressure. Macroeconomic policy in the countries of the region can be improved by enhancing the macroeconomic forecasting system and applying budget rules for managing budget and debt risks.

Does National Debt Matter? -Analysis Based on The Economic Theories

The national debt has been increasing at a higher percentage than the GDP of the United States. Since the 2008 Global Financial Crisis, national increased dramatically since the country borrowed to finance its expenditures. Moreover, with the onset of the Covid-19 pandemic, national debt increased to 105% of the GDP. There have been worries about whether the national debt is a matter of concern, and many theories have been developed to explain national debt. The classical economists advocated for a balanced budget where taxes finance government expenditure. Keynes argued that governments should borrow to finance their spending to avoid a decrease in demand. The pecking order theory argued that when businesses use all their retained earnings, they should prefer debts to equity to finance their expenditures. Trade-off theory advocated for financing through debt because it is cheaper. Debt payments of a company are deductible through tax, and less risk is involved when taking debt than equity. Finally, the neoclassical economists assumed that government debt has a one-time maturity and pays the current interest rate. Using the concepts of these theories, it is clear that national debt should not be a matter of concern because it is cheaper to pay debt than equity and debt benefits a country in the long run.

Fiskalpolitik in Zeiten der Pandemie: Staatsschulden als Kernelement einer sinnvollen staatlichen Risiko- bzw. Krisenpolitik

Zusammenfassung Die als Folge der Corona-Pandemie steigende Staatsverschuldung wird zunehmend kritisch gesehen, weil sie angeblich zukünftige Generationen mit Schulden belaste. Saldenmechanische Zusammenhänge zeigen, dass dies nicht richtig ist: zukünftige Generationen erben einen Verteilungskonflikt zwischen zukünftigen Steuerzahlern und zukünftigen Haltern der Staatsschuldtitel, aber keine Netto-Schulden. Da eine Reihe von Überlegungen dafür spricht, dass die Staatsverschuldung selbst dazu beiträgt, die Angebotsseite der Volkswirtschaft zu stärken, ist zu erwarten, dass zukünftige Generationen diesen Verteilungskonflikt lösen werden, ohne auf Staatskonkurs oder (Hyper-)Inflation zurückzugreifen. Insgesamt ist die Ausweitung der Staatsverschuldung daher ein wichtiges Element einer angemessenen Risiko- und Krisenpolitik in der Pandemie. Abstract: Fiscal Policy in Times of Pandemic: National Debt as a Core Element of a Sensible Government Risk and Crisis Policy The COVID-19 pandemic has led to a strong rise in government deficits. Critics argue that the policy approach burdens future generations with debt. However, simple balance sheet mechanics show that this is not the case. Future generations inherit a distributional conflict on future resources between future taxpayers and future holders of claims on governments, but no net debt. Moreover, several arguments suggest that expansionary fiscal policies support investment and hence raise the stock of real capital future generations can make use of. Overall, we conclude that the expansion of government debt has been the correct policy approach for dealing with the pandemic.

Age and Support for Public Debt Reduction

Many scholars and policymakers see the continuing rise of debt burdens in the advanced industrialized world as the product of aging populations and increasing dependency ratios. In fact, many prominent theoretical models of government debt accumulation -- often used to justify fiscal rules and austerity measures -- make explicit assumptions that individuals will have different preferences for debt reduction as they age. While such models have been influential, the fundamental assumption regarding the relationship between age and preferences for growing debt has not been test empirically. Using a decade's worth of data from the Eurobarometer survey across 33 countries, we find that age has a modest, non-linear impact on concern for national debt burdens. In general, the middle-aged show the most concern for debt reduction, while the young and the old are less likely to view reducing government debt as a policy priority. Notably, the relationship is strongest in countries with more generous old-age benefits.

A Kaleckian wealth tax to support a Green New Deal

Green New Deals are being widely discussed as both a means to confront climate change and to improve aspects of social well-being. An important facet of the discussion is how they should be financed. The negative impacts of Covid-19 on national budgets and sovereign debt question whether the implementation of Green New Deals is feasible if austerity needs to be introduced to achieve sustainability. This article assesses whether a wealth tax based upon the work of Michal Kalecki could help avoid austerity measures and facilitate the introduction of Green New Deals. While wealth taxes have traditionally been defined on net worth or assets to reduce wealth inequality, the formulation is meant to be equitable by applying to gross wealth or assets. Estimates are calculated for the United States and turn out to be quite modest. The approach not only generates revenue to cover expected net interest outlays on national debt, but additional revenue to pay down portions of it and/or support green initiatives, such as Biden’s de-carbonisation policy. The article concludes with a discussion of challenges for the tax’s effectiveness. JEL Codes: H2, H3, B2, B3