The fact that – with high public debt but – relative monetary stability and – correspondingly low inflation expectations, many private households limit their current consumption in favor of saving because they expect a higher tax burden ratio in the near future. It is believed that such a correlation can be statistically proven for the euro area. – However, if households expect prices to rise due to high government debt, the opposite occurs: the saving rate falls and the consumption rate rises. – See Constancy Criterion, Ricardo Effect, Fiscal Drag, Government Debt Reduction, Government Debt-Interest Rate Relationship, Path Inflation.
Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent!
University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk
https://www.jung-stilling-gesellschaft.de/merk/
https://www.gerhardmerk.de/