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Should We Worry about Government Debt? Thoughts on Australia's COVID‐19 Response
Author(s) -
Edmond Chris,
Holden Richard,
Preston Bruce
Publication year - 2020
Publication title -
australian economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.308
H-Index - 29
eISSN - 1467-8462
pISSN - 0004-9018
DOI - 10.1111/1467-8462.12402
Subject(s) - worry , government debt , government (linguistics) , debt , covid-19 , maturity (psychological) , monetary economics , internal debt , hedge , economics , debt to gdp ratio , business , economic policy , finance , political science , medicine , ecology , anxiety , linguistics , philosophy , disease , pathology , psychiatry , infectious disease (medical specialty) , law , biology
No. While the COVID‐19 crisis has required a dramatic increase in debt‐financed government spending, in the current conditions the benefits from this debt are unusually high and the costs unusually low. While conditions can change, the Australian Government can right now hedge against these risks by lengthening the maturity structure of government debt, even at the cost of a modest increase in its current servicing costs.