It is my understanding that not only government but also local authorities issue bonds. This answer on Money and Finance Stack Exchange suggests that such debts are not accounted in the computation of the government debt (At least for the US).


  1. Is there an estimate of the total municipal bond per countries?
  2. Could a very indebted country try to reduce his debt to GDP ratio forcing local authorities to issue more bond and thus reducing the government spending? If yes, is there any country that attempted this strategy?

To answer your second question: a country could probably do that, but it would achieve not much more thereby than clean up that particular statistic. In Europe, the Treaty of Maastricht that specifies the maximum debt-to-gdp ratio a country can have pertains to the whole government sector, which is defined so as to include local authorities (see this explanation on the site of the Belgian government https://www.debtagency.be/en/datagovernmentdebtdebt).

I don't know the situation in the U.S., but I think it can be assumed that in general any state or international institution that wants to know about another state's debt levels will not only look at the debt-to-gdp ratio.

In an analogous case, most E.U. officials are aware that the United States unemployment rate is on average lower than the European version partly because of differences in labour force participation, which works 'behind the scenes' of the official statistic (http://bruegel.org/2017/09/employment-in-europe-and-the-us-the-eus-remarkable-strength/).

  • $\begingroup$ Thanks for your answer. I wonder why goverment debt vs gdp is more popular than general goverment debt vs gdp (at least this is my impression), do you have any idea? Out of curiosity, do you have any source explaining the difference between USA and European unemployment rate definition? $\endgroup$ – pinpon Jan 2 at 14:33
  • $\begingroup$ Sorry, I remembered it incorrectly. It is Canada which would have a lower unemployment rate if it used U.S. definitions (bls.gov/opub/mlr/2000/06/art1full.pdf). Compared to Europe, the lower unemployment rate in the U.S. can partly be explained by the labour force participation rate, on the basis of which unemployment is calculated. That rate is lower in the U.S., so some who might otherwise be considered unemployed are just not counted as part of the labour force (bruegel.org/2017/09/…) $\endgroup$ – hrrrrrr5602 Jan 3 at 13:51
  • $\begingroup$ With regards to the popularity of the statistic: I'm not sure one statistic is really more popular than the other. I think there is a confusion in what people mean when they say 'government debt'. In Europe the Maastricht debt restrictions featured prominently in the media during the Great Recession, and each time the 'government debt' was cited. As I argued above, this measure included local government debt as well. It would be better to use 'national debt' (or some equivalent) for the debt that is only owned by the national government. $\endgroup$ – hrrrrrr5602 Jan 3 at 14:01

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