TITLE

The Sustainability of Budget Deficits in a Stochastic Economy

AUTHOR(S)
Bohn, Henning
PUB. DATE
February 1995
SOURCE
Journal of Money, Credit & Banking (Ohio State University Press);Feb95, Vol. 27 Issue 1, p257
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
The article presents an examination into research on the sustainability of the U.S. fiscal policy in light of budget deficits. Criticism and extensions to previous empirical modeling are provided, outlining a stochastic model to integrate dynamic efficiency methods to calculate interest rates and discounting behaviors. A general government budget equation is modeled, utilizing a simple general equilibrium paradigm which then derives transversality conditions and intertemporal budget constraints. Commentary is also offered outlining the model's application to the U.S. system.
ACCESSION #
9504245372

 

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