Bloated Government Debt Is Here to Stay: Jackson Hole Paper

Authors see ‘good reasons’ for interest rates to trend higher
Inflation not a sustainable route to reducing debt, they write

Christine Lagarde, president of the European Central Bank (ECB), from left, Kazuo Ueda, governor of the Bank of Japan (BOJ), and Jerome Powell, chairman of the US Federal Reserve, at the Jackson Hole economic symposium in Moran, Wyoming, on Aug. 25. — Christine Lagarde, president of the European Central Bank (ECB), from left, Kazuo Ueda, governor of the Bank of Japan (BOJ), and Jerome Powell, chairman of the US Federal Reserve, at the Jackson Hole economic symposium in Moran, Wyoming, on Aug. 25.
Photographer: David Paul Morris/Bloomberg

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By Rich Miller

August 26, 2023 at 3:07 PM UTC

This article is for subscribers only.

Swollen government indebtedness — and the upward pressure that puts on interest rates — is here to stay, according to a paper to be presented to the Federal Reserve’s annual Jackson Hole symposium on Saturday.

“High public debts are not going to decline significantly for the foreseeable future,” International Monetary Fund economist Serkan Arslanalp and University of California, Berkeley professor Barry Eichengreen wrote in the paper. “Countries are going to have to live with this new reality as a semi-permanent state.”