Definition
It includes obligations issued to investors and, depending on usage, may refer to federal, state, local, or total government borrowing.
Political Dictionary
Public Debt
Public debt is money owed by a government.
Why It Matters
It affects budgets, interest costs, financial markets, and future policy choices.
How It Works
Governments issue bonds and other securities and repay principal and interest.
History
Governments have borrowed for wars, infrastructure, crises, and ordinary deficits for centuries.
Example
A state may issue bonds to finance a transportation project.
Common Misconceptions
- Public debt and annual deficit are identical.
- All public debt is owed abroad.
- Governments never repay principal.
Related Terms
- Fiscal Policy
- Monetary Policy
- Inflation
- Economic Growth
- Government Spending
Related Topics
See Also