Public Debt Accounting

This our weekly discussion of the price level as it relates to Perry Mehrling's money view. The price level is the average price of goods in terms of money or, equivalently, the price of money in terms of goods. But what determines the price level? Why is the price level important? And how does it fit into the money view?

This week, we will explore how we define and account for public debt. What does it mean to have "too much" public debt? Why do debt-to-GDP ratios matter? How does politics influence our framing of public debt? To what extent is the analogy to private debt useful, and where does this analogy break down? How can we draw comparisons draw between public debt as it exists in different political and historical contexts, when the definition and accounting of public debt are context dependent?

To what extent is it possible to have a universally reconcilable methodology for understanding public debt that transcends politics and history?

To prompt discussion, we're reading a chapter by Éric Monnet and Blaise Truong-Loï from the 2020 book A World of Public Debts.

The History and Politics of Public Debt Accounting