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The Deficit Gamble / Laurence Ball, Douglas W. Elmendorf, N. Gregory Mankiw.
- Format:
- Book
- Author/Creator:
- Ball, Laurence.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w5015.
- NBER working paper series no. w5015
- Language:
- English
- Subjects (All):
- Budget deficits.
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 1995.
- Cambridge, Mass. : National Bureau of Economic Research, 1995.
- Summary:
- The historical behavior of interest rates and growth rates in U.S. data suggests that the government can, with a high probability, run temporary budget deficits and then roll over the resulting government debt forever. The purpose of this paper is to document this finding and to examine its implications. Using a standard overlapping-generations model of capital accumulation, we show that whenever a perpetual rollover of debt succeeds, policy can make every generation better off. This conclusion does not imply that deficits are good policy, for an attempt to roll over debt forever might fail. But the adverse effects of deficits, rather than being inevitable, occur with only a small probability.
- Notes:
- Print version record
- February 1995.
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