ABSTRACT
The government's debt rises when the government runs a deficit and falls when it runs a surplus. The debt is recorded as gross general government debt, that is, an estimate of the total debt outstanding for all levels of government, the most widely used measure for government debt in the European Union. Looking at government debt relative to gross domestic product (GDP) is more sensible than looking at debt in absolute numbers, as the burden of debt can best be evaluated relative to income. Government debt generally shoots up during wars and comes down afterward. In addition, there has been a general upward trend after the 1970s and a strong increase after the global financial and economic crisis of 2008-2009Source: International Monetary Fund. Hence, if a government's ability or willingness to service its debt is questioned, financing costs for the firms in the country concerned are also likely to increase, depressing private investment.
