In a recent interview on the public-service radio channel NPO Radio 1, Robert Dur, Professor of Economics at Erasmus School of Economics, discusses the consequences of a rising Dutch national debt. According to Dur, a higher national debt does not necessarily have to be a problem, provided that the expenditure is used for productive investments that strengthen the economy.
There is a good chance that the national debt will increase significantly in the coming years. A majority in the House of Representatives wants to pay for the billions in investments for the electricity grid with additional debts. The mega-expenditure on defense will probably also lead to higher debts.
Healthy balance between debt and economic growth
During the conversation in the radio programme Geld of je Leven, Dur is asked whether it is a problem if the national debt increases significantly. Dur explains that government expenditure, financed by debts, can stimulate economic growth in the long term. Think of investments in infrastructure, education and defense. 'If interest rates remain low and the economy grows, a higher national debt can be justified,' says the professor. However, he warns about the risks of rising debts. ‘It is important that the government pursues a sustainable financial policy and ensures a healthy balance between debt and economic growth. We must not burden future generations with an unsustainable debt burden.’
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Click here for the full interview with Robert Dur. For more information, please contact Ronald de Groot, Media & Public Relations Officer at Erasmus School of Economics: rdegroot@ese.eur.nl, mobile +31 6 53 641 846.
