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.
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Notes
See James R. Barth, George Iden, & Frank S. Russek, ‘Do Federal Deficits Really Matter?’ Contemporary Policy Issues (September 1984), p. 80.
Benjamin M Friedman, ‘Implications of the Government Deficit for US Capital Formation,’ The Economics of Large Government Deficits, Federal Reserve Bank of Boston (1984).
Michael J. Hamburger & Burton Zwick, ‘Deficits, Money and Inflation,’ Journal of Monetary Economics, vol. 7, no. 1 (1981), pp. 141–50.
Edward M. Gramlich, ‘How Bad are the Large Deficits?’, in Gregory B. Mills & John L. Palmer (eds), Federal Budget Policy in the 1980s, The Urban Institute Press (1984).
Edmund S. Phelps, ‘The Golden Rule of Accumulation: A Fable for Growthmen,’ The American Economic Review, vol. 51, no. 4 (1961), pp. 638–43.
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© 1988 Fondation Internationale des Sciences Humaines
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Penner, R.G. (1988). The Consequences of Persistent Large Budget Deficits. In: Cavanna, H. (eds) Public Sector Deficits in OECD Countries. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-08952-9_2
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DOI: https://doi.org/10.1007/978-1-349-08952-9_2
Publisher Name: Palgrave Macmillan, London
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