The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Government Budget Restraint

  • Carl F. Christ
Reference work entry


Macroeconomic policy analysis has changed since the government budget restraint (GBR) was incorporated into macroeconomic models. The GBR is the requirement that the total of government expenditure for all purposes – interest, other transfer payments, and goods and services – must equal the total of government financing from all sources – taxes, borrowing from the central bank (i.e. printing money), borrowing from others, and net reduction in reserves of assets such as gold, foreign currency or minerals. For simplicity we ignore changes in reserves.

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Carl F. Christ
    • 1
  1. 1.