Abstract
The first point refers to the dynamics of public debt. The government spends a certain amount per head of the active workers on goods and services G = gN with g = const. In addition the government borrows a given sum per head of the active workers B = bN with b = const. Public debt and the budget deficit of the current period add up to public debt of the subsequent period D+1 = D + B. Moreover the government levies a lumpsum tax per head of the active workers T = tN with t = const. The government disburses the interest rate r on public debt D, so public interest equals rD. The government budget constraint is B + T = G + rD. Paying heed to the behavioural functions, the identity can be expressed as bN + tN = gN + rD. Here the government fixes purchases per head and the deficit per head, while it accommodates the lumpsum tax.
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© 1995 Physica-Verlag Heidelberg
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Carlberg, M. (1995). Fixed Deficit Per Head. In: Sustainability and Optimality of Public Debt. Contributions to Economics. Physica-Verlag HD. https://doi.org/10.1007/978-3-642-46965-7_9
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DOI: https://doi.org/10.1007/978-3-642-46965-7_9
Publisher Name: Physica-Verlag HD
Print ISBN: 978-3-7908-0834-6
Online ISBN: 978-3-642-46965-7
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