
Of the almost 39 percentage points of GDP increase in the debt ratio, about two-thirds is explained by revenue weakness and the fall in GDP during 2008-09 (which led to an unfavorable interest rate-growth differential during that period, in spite of falling interest rates). Interestingly, the IMF report estimates that the fiscal stimulus contributed to only one-tenth of the increase in debt. Much the same story comes out from an examination of the sources of the massive $1.2 trillion US fiscal deficit.
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