The number of production investments in relation to the size of the economy has fallen in Finland since the 1990s. One explanatory factor is the reduction of the size of the business sector as the share of the business sector in the national economy has passed to the public and the household sector. The Finnish public sector has been increased by economic stimulus and increased public debt.
The purpose of the project is to popularize economic studies on the relationship between public debt and productivity enhancing investments. There is a perception that there is no need to worry about indebtedness, as countries get loans at favourably terms because of the actions of the Central Bank. However, interest rates are not the only perspective on indebtedness.
The project brings a broader perspective on the general debate on public debt during low interest rates. Although in the short term, the economy can be revived in recession, in the long term, public indebtedness can have harmful effects on economic growth.
