Question

1. Describe and compare the approaches that France and Britain took to addressing their high levels of public debt accumulated between 1700-1815 and 1913 – 1950. Discuss in each case the redistributive impacts of the approach implemented. In your opinion do any of these approaches have any relevance in addressing accumulated public debt in today’s wealthy economies? Explain.

Answer 1

France and Britain have proactively reduced debt using following strategies:

• Sovereign debt refinancing methods to decrease interest payouts by fluctuating interest rates
• Selling government securities
• Currency swap agreements
• Raising incone taxes and corporate taxes
• Import duty and customs duty increase
• Divestment of government stake in public sector companies

The increase of corporate taxes as method is best way of redistribution where taxes from top fortune 500 conpanies was redistributed amongst lowest quintile population which had an income below national median income through government spending routes.

In todays economy government usually tax the highest quintiles population and redistribute amongst lowest quintile population based on income.