Research on the Economic Effects of Government Bonds

Author: Liu Hua
Publisher:
Publish Date: 2004-01-01
Features: In the social and economic life, public debt is a topic with an extremely long history. In China, its origins can perhaps be traced back over two thousand years. The Chinese terms "debt platform" and "highly indebted" originate from kings borrowing money rather than private individuals. Since the reform and opening-up, the Chinese government began to borrow foreign debt again in 1979 and resumed the issuance of domestic debt in 1981. The vast debt has sparked fierce debates. Therefore, studying the economic effects of public debt is of great practical significance. The author of this book has conducted a systematic study on the theoretical evolution of public debt and its development in practice, proposing insightful new perspectives. For example, when reflecting on "public goods," the author identified the distinction between them and "public capital goods," arguing that education is an investment in public capital goods, carrying capital significance; defense spending is also, to some extent, an indirect capital expenditure. If public debt is used for "public capital goods," especially for investing in public capital goods with high technical multipliers, high linkage and influence coefficients, and significant spillover effects, it can promote the growth of the national economy. When public debt investment in public capital goods leads to a faster rise in the marginal return rate of private capital than the rate of interest increase, the "crowding-out effect" of public debt will be greatly reduced, forming a complementary relationship between public capital goods and private capital goods, thereby boosting private investment. In summary, the book elaborates on the relationship between public debt and aggregate supply, aggregate demand, economic growth, public consumption, interest rates, investment, money supply, money multiplier, and prices.