Sustanable Public Debt: How To Achieve It?

“The Keynesian Approach” dominated the politico-economic principles after Word War II in particular during the 1970s where governments must play an active role in stabilizing market economies. In the other hand the public expenditures can raise the aggregate demand with the spending being financed by public deficits. With low aggregate demand and high unemployment the government must become active in order to restore the full employment equilibrium which then allows to reduce outstanding public debt. The public debt does not pose a problem if the government runs into debt in the home country because no resources are lost and public defcits just imply a rellocation of resources from taxplayers to bondholders.