PUBLIC DEBT AND DEMOCRACY

Most industrial countries have incurred a sharp rise in public debt over the past twenty years. The paper doubts the sole responsibility of economic factors for this fiscally detrimental trend. It emphasizes the crucial role of certain politico-economic mechanisms for the large budget deficits in representative democracies. The paper argues in favour of a constitutional reform if society is to be able to protect future generations from the adverse distributional consequences of public debt. Given the long-run effects of continued government borrowing analyzed in Section II, and given the politico-economic interactions described in Section III, two reform proposals are finally derived in Section IV.