Life-Cycles, Dynasties, Savings: Implications for Closed and Small, Open Economies (Electronic book text)

Over the postwar period, there has been an appreciable increase in government debt among most OECD countries. And while this peacetime expansion in debt has been substantial in many cases, the reasons underlying this trend are not fully known. 2 More recently, fiscal consolidation has slowed the debt build-up and in some cases reversed it. An interesting question remains, however, as to the likely economic consequences of these persistent budgetary deficits (and their reversals)-an issue that has been the subject of a somewhat strident and ongoing debate, in which no clear consensus has emerged.