ABSTRACT
Governments have been borrowing from the public since time immemorial, but until the end of the seventeenth century, borrowing was infrequent and of negligible size relative to the economy. Over the last 50 or 60 years, there has been an unprecedented reliance by many countries' governments on debt finance for central government expenditures. Over the same few decades, both the amount and nature of central government expenditures changed. Total spending grew because of the emergence and growth of major social spending programs, which themselves are in effect an implicit form of debt. Until recent times, there has been little obvious effect of government debt on countries' economies. However, the recent, unprecedented peacetime growth of debt and the future taxes that it implies may lead to a departure from the historical lack of association between debt and economic activity.
