ifo Schnelldienst 08/2020: Record Debts to Combat Covid-19 Consequences

Record Debts to Combat Covid-19 Consequences – What Can the State Afford?

The coronavirus pandemic and the ensuing lockdown are leading to a deep economic crisis worldwide: governments and central banks are responding to the coronavirus crisis by providing vast sums of money to stabilize the economy. As tax revenues collapse, aid for the economy has to be financed by a sharp rise in national debt. At the same time, the central banks are opening their money floodgates. As a result, the states are financing their economic stimulus packages to a considerable extent by printing money; however, the financial conditions for dealing with the economic consequences of the coronavirus pandemic vary greatly among European states. What are the limits of public debt? Will it be possible to reduce public debt to a reasonable level after the crisis?

With contributions from:

• Lars P. Feld, Record Debts in the Coronavirus Crisis – Can the German State Afford It?
• Martin Beznoska, The German State’s Debt Will Remain Sustainable despite the Coronavirus Crisis
• Oliver Holtemöller, Record Debts to Combat Covid-19 Consequences Can Be Financed – but Debt-Financed Consumption Stimulus Does Not Achieve the Desired Effect
• Hans-Peter Burghof, Economic Freedom as a Crisis Currency
• Ulrike Neyer, The Role of the Eurosystem as Lender of Last Resort in the Coronavirus Crisis
• Clemens Fuest, How Do You Get High National Debts under Control?
• Friedrich Heinemann, Three Details of the European Coronavirus Packages Demonstrate a Departure from the Maastricht Financial Constitution
• Thomas König, Covid-19 and Europe: The Dangerous Game of Solidarity