Public Debt and the Risk Premium: A Dangerous Doom Loop

The view that deficits and higher public debt can be beneficial received an important boost via Olivier Blanchard’s 2019 presidential address at the American Economic Association (Blanchard 2019). In this opinion piece, which first appeared on VoxEU, Cinzia Alcidi and Daniel Gros examine Blanchard’s analysis and the longer-term link between risk premia and public finances.