What do people in CESEE think about public debt

This paper investigates public attitudes toward public sector debt in ten Central, Eastern and Southeastern European (CESEE) countries. Unique data from a special module of the 2018 OeNB Euro Survey wave indicate that people in CESEE have, in general, negative attitudes toward public debt. Most respondents believe that higher public debt compromises the opportunities of future generations and implies higher taxes or lower social benefits in the future. Beliefs that higher public debt allows for higher investments today are also widespread but less common. Econometric analysis reveals that wealthier individuals and more disadvantaged societal groups (particularly people who have experienced economic hardship) tend to be most concerned about public debt. The finding that the worse off are more debt averse contrasts with existing studies for advanced economies that have found that it is primarily the better off who are more skeptical. This difference may be explained by the comparatively lower level of social spending and the predominance of regressive tax systems in CESEE, which could make disadvantaged groups of society believe that the burden of higher debt must eventually be shouldered by them.