# Consumption-reducing public debt

- Canonical URL: https://www.gerhardmerk.de/consumption-reducing-public-debt
- Post ID: 591149
- Modified: 2023-07-25T20:59:30+00:00
- Language: en

## Definition

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/

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