Recent statistics on both explicit and hidden government debt in Finland and other EU countries give cause for taking the issue of high levels of public debt raise seriously. The topic is particularly relevant for Finland today as the EU’s fiscal rules will soon be revisited and Finland will have to take an official stand on the level of government debt ratio that all EU countries will have to attain.
The purpose of this research project is to find out
A thorough understanding of the economic literature and of the mechanism through which public debt my adversely affect growth is needed to formulate plausible policy recommendations. The background report consists of a review of recent literature.