New Directions in the Relationship Between Public and Private Debt

Benjamin M. Friedman

No 2186, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Until the 1980s the outstanding indebtedness of government and private-sector borrowers in the United States exhibited sufficient negative covariation that total outstanding debt remained steady relative to nonfinancial economic activity. Three hypotheses -- one based on lenders' behavior, one on borrowers? behavior, and one on credit market institutional arrangements -- provide potential explanations for this phenomenon. Since 1980 the U.S. debt markets have departed from these previously prevailing patterns, however, as both government and private borrowing have risen sharply.

Date: 1987-03
Note: ME
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Published as Friedman, Benjamin M. "New Directions in the Relation Between Public and Private Debt." Science, Vol. 236, No. 4800, (April 24, 1987), pp. 397-403.

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