Question

The following chart, published by the Wall Street Journal, shows the debt-to-GDP ratios for several countries. The obvious outlier in this chart is Japan. (Source: http://goo.gl/umZMId)

Debt Buildup Gross government debt as a percentage of GDP for major Industrialized countries 25.0% Japan 200 150 Italy U.S. UK France Cada Germany 100 50 05 10 73 0 1995 2000 Estimates Source International Monetary Fund The Wall Street Journal

1. What was Japan’s debt-to-GDP ratio in 2013, compared to other countries?
2. What are the possible effects of a large government debt?

Answer 1

Japans debt to GDP ratio was nearly 250 percent double of what other countries had in 2013 at nearly 100-150% range.

The possibility of large government debt is rise in interest rates, lower ability of government to spend in future, higjer taxes in near future, and high budget deficits as well as low sovereignty rating.

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