Growth to the rescue

World governments have taken on significant debt to fight COVID-19. But problems from a debt overhang are not inevitable. After World War II in the United States, and in many other examples over time, the debt burden was reduced by driving nominal growth, not by cutting debt.

After World War II, the United States reduced its effective debt burden through rapid growth in nominal GDP.

To read the article, see “Looking beyond the pandemic: Could the world economy gain more than it lost to COVID-19?”, June 14, 2021.