The Consequences of Persistent Large Budget Deficits

Rudolph G. Penner

Chapter 2 in Public Sector Deficits in OECD Countries, 1988, pp 41-75 from Palgrave Macmillan

Abstract: Abstract A sharp rise in federal deficits in the last few years and projections of a string of very large deficits beyond the end of this decade have been accompanied by a heated public debate about their consequences. The projections indicate that under policies currently in place, eight consecutive years of fairly brisk uninterrupted economic growth would leave the ratio of federal budget deficits relative to GNP, higher than any experienced in peacetime prior to 1982. Such deficits would add rapidly to the federal debt and would also greatly increase the share of GNP that must be devoted to servicing this debt.

Keywords: Interest Rate; Real Interest Rate; Budget Deficit; Nominal Interest Rate; Capital Inflow (search for similar items in EconPapers)
Date: 1988
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DOI: 10.1007/978-1-349-08952-9_2

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