econ101fall11lecture20

econ101fall11lecture20 - Deficits and Debt Required Reading...

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Deficits and Debt Required Reading Chapter 16
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Motivation • Have discussed Fiscal Policy Changes in • Have not discussed Government Budget Deficits Accumulation of the National Debt • What are the Effects of Deficits and the Accumulation of the National Debt on the economy? ,, , o r GTRTX t
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Measurement: Government Budget Definitions: G = Government Purchases TR = Transfer Payments InP = Interest Payments on the National Debt TX = Tax Revenues Spend = G Re Spend overnment Spending Rec = Government Receipts Bud = Government Budget Bud = c GT R I n P T X  
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Re Spend Bud = When Spend > Rec Bud > 0 Deficit When Spend < Rec Bud < 0 Surplus When Spend = Rec Bud = 0 Balance c GT R I n P T X    
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Measurement: Government Debt • ND = National Debt = Value of Outstanding Government Bonds • Government Bond Financial Security or Contract Government (Borrower) pays Holder (Investor) Interest or Coupon Payment per period Value of the Bond at Maturity (usually $10K) Bond sold in Market for whatever Price it will bear Funds raised used to finance Government Spending
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Government Budget and the National Debt When Re 0 0 When
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This note was uploaded on 01/12/2012 for the course ECON AS.180.101 taught by Professor Maccini during the Fall '08 term at Johns Hopkins.

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econ101fall11lecture20 - Deficits and Debt Required Reading...

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