Abstract
This chapter further extends the loanable funds framework to consider the implications for national income that stem from investment and international trade crowding out effects, again with reference to the alternative contexts of closed economy, and open economy with different degrees of international capital mobility.
The practice, therefore, of contracting debt will almost infallibly be abused in every government.
David Hume
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References
Frenkel, J., & Razin, A. (1996). Fiscal Policies and Growth in the World Economy. Cambridge, London: MIT Press.
Makin, A. J. (2003). Global Finance and the Macroeconomy. London: Palgrave.
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Obstfeld, M., & Rogoff, K. (1996). Foundations of International Macroeconomics. Boston: MIT Press.
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Makin, A.J. (2018). Budget Deficits and National Income. In: The Limits of Fiscal Policy. Palgrave Pivot, Cham. https://doi.org/10.1007/978-3-319-90158-9_4
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DOI: https://doi.org/10.1007/978-3-319-90158-9_4
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Print ISBN: 978-3-319-90157-2
Online ISBN: 978-3-319-90158-9
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