What do budget deficits do?
AbstractThis paper discusses the effects of budget deficits on the economy in four steps. First, it reviews standard theory about how budget deficits influence saving, investment, the trade balance, interest rates, exchange rates, and long-term growth. Second, it offers a rough estimate of the magnitude of some of the effects. Third, it discusses how budget deficits affect economic welfare. Finally, it considers the possibility that continuing budget deficits in a country could lead to a 'hard landing' in which the demand for the country's assets suddenly collapses.
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Bibliographic InfoArticle provided by Federal Reserve Bank of Kansas City in its journal Proceedings - Economic Policy Symposium - Jackson Hole.
Volume (Year): (1995)
Issue (Month): ()
Other versions of this item:
- Laurence Ball & N. Gregory Mankiw, 1995. "What do Budget Deficits Do?," Harvard Institute of Economic Research Working Papers 1740, Harvard - Institute of Economic Research.
- Laurence Ball & N. Gregory Mankiw, 1996. "What Do Budget Deficits Do?," NBER Working Papers 5263, National Bureau of Economic Research, Inc.
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