When could government debt warrant higher taxes?
When does government debt get too big to be paid back and warrant tax increases, and under what conditions do stimulus programs work best? So far, monetary and fiscal policies have succeeded in helping economic recovery with higher consumption, investment and output, and governments will be able to service their debt, according to a recent research paper titled “Can Monetary Policy Create Fiscal Capacity?,” co-authored by finance professor Tim Landvoigt at Wharton.
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