325_Supplement17

325_Supplement17 - Department of Economics University of...

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Intermediate Macroeconomic Analysis Spring 2011 1 Department of Economics University of Maryland Economics 325 Intermediate Macroeconomic Analysis Supplement 17 Professor Sanjay Chugh Spring 2011 The following article appeared in the Wall Street Journal on April 18, 2011. It presents Treasury Secretary Timothy Geithner’s comments the previous several days about the Republicans’ and Democrats’ evolving views on passing legislation soon to lift the U.S. government’s upper limit on the total stock of debt outstanding, which is roughly $14 trillion ($14.3 trillion). As was to be expected, views are converging towards a passage of such legislation in time for the U.S. government to evolve any possibility of failure to repay any of its maturing debt, which current projections show occurring sometime within the next couple of months. You should be able to use the framework of Chapter 15 to broadly think about the issues discussed here, focusing on the intertemporal aspects.
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Intermediate Macroeconomic Analysis Spring 2011 2 POLITICS APRIL 18, 2011 Geithner Says GOP to Act on Debt Cap By NEIL KING JR. and LUCA DI LEO WASHINGTON—Treasury Secretary Timothy Geithner said Republican leaders have assured the White House they are prepared to lift the debt ceiling in time to avoid disruptions to capital markets and a potential credit default. In interviews aired on the Sunday talk shows, Mr. Geithner said House Speaker John Boehner and other senior Republicans told President Barack Obama in discussions last week that they were aware of the risk of a credit default and were open to lifting the limit
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325_Supplement17 - Department of Economics University of...

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