A Note on the Sustainability of Primary Budget Deficits

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.

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Year of publication:	1991-02
Authors:	Nielsen, Søren Bo
Institutions:	Økonomisk Institut, Københavns Universitet
Subject:	fiscal theory \| det \| deficit

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Series:	Discussion Papers.
Type of publication:	Book / Working Paper
Notes:	Published in: Journal of Macroeconomics, 1992, 14(4) pp 745-754 Number 91-03 9 pages
Classification:	E62 - Fiscal Policy; Public Expenditures, Investment, and Finance; Taxation
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005233007