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Debt in Relation to the Standard of Living Enjoyed by the Population of Developed Countries

The paper attempts to analyze the effects of the cumulated public sector debt, in this relation essentially government debt and family debt, primarily on the development of the population’s standard of living. In this regard, the paper quantifies the impact of debt on the real standard of living – whether we define it merely as the ability to consume, or whether we define it widely as the sum of multiple criteria, including, for instance, the quality of the environment. This quantification uses the data from the economy of the Czech Republic; however, this method can be in principle used for other national economies but must be adjusted to reflect the specific features of their development. Using the analysis of time series, the paper investigates some other aspects of the debt situation of families in the Czech Republic, especially the development of the relationship between the families’ savings and debt, and finds that debt prevails over savings in the long run. Several conclusions for the future can be derived from these results. These conclusions can be summarized in a statement that future political representations will have to continuously bridge the divide between the need to reduce the standard of living of large groups of the population on one side and the need to make sure that the necessary reforms are politically viable on the other side.

Harvard 2012 Fullpaper
[-- 6_harvard-2012.pdf --]
Harvard 2012 Slides
[-- 6_harvard-2013.pdf --]
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