A Note on the Sustainability of Primary Budget Deficits

Søren Nielsen

No 91-03, Discussion Papers from University of Copenhagen. Department of Economics

Abstract: This note studies the sustainability of primary budget deficits in a situation where the public sector has also incurred debt to the private sector. It shows that if the rate of pure time preference is small relative to the population growth rate, if public consumption constitutes a modest fraction of output, and if the primary budget deficit is sufficiently small, then it is also sustainable, and the associated steady state is locally stable.

Keywords: fiscal theory; det; deficit (search for similar items in EconPapers)
JEL-codes: E62 (search for similar items in EconPapers)
Pages: 9 pages
Date: 1991-02
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Published in: Journal of Macroeconomics, 1992, 14(4) pp 745-754

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Persistent link: https://EconPapers.repec.org/RePEc:kud:kuiedp:9103

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