Moderate Public Debt Scale

In October2009, the debt crisis first erupted from Greece. Then, the sovereign debt crisis gradually spread to other countries in Europe, becoming worse and worse. The outbreak of European debt crisis reminds States of the importance of keeping debt at the appropriate scale.From the point of view of the history of economic thought, this paper combs the development context of the theory of debt modest scale, integrates relevant contents of the theory of debt modest scale, and makes comment on them. This article divides the development course of the theory of debt modest scale into two stages:qualitative analysis and quantitative analysis. In the stage of qualitative analysis, we make comment on the changes of the mainstream school’s attitudes of public debt from the13th century to1970s in chronological order combining with the history of public debt’s development. Most of the classical economic and previous scholars are against the public debt; but after the "big crisis", Keynesians endorse public debt even active liability; after1970s’"stagflation", a number of scholars reflect Keynesian proposition and stand for moderate liabilities. As a result, the debt modest scale theory really steps in the stage of quantitative analysis. Due to the different understanding of the definition of "debt modest scale", we divide these complex theory into three mainlines to make commentary:The first mainline is to determine the appropriate scale of public debt through measuring public debt’s positive or negative economic effects; The second is based on the perspective of the sustainability of the public debt, adopting a risk index system to determine whether the debt is in appropriate scale, which is the prevailing evaluation system of debt appropriate scale; The last mainline is to build a series of refined economic model, through optimization method to determine the appropriate scale of debt. Finally, this paper also makes comparison of these three mainlines, concluding that prevailing evaluation system of debt appropriate scale lacks for the analysis of public debt’s economic effect.