Should We Worry about Government Debt? Thoughts on Australia's COVID‐19 Response

Chris Edmond, Richard Holden and Bruce Preston

Australian Economic Review, 2020, vol. 53, issue 4, 557-565

Abstract: No. While the COVID‐19 crisis has required a dramatic increase in debt‐financed government spending, in the current conditions the benefits from this debt are unusually high and the costs unusually low. While conditions can change, the Australian Government can right now hedge against these risks by lengthening the maturity structure of government debt, even at the cost of a modest increase in its current servicing costs.

Date: 2020
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