TITLE

A Guide to the Deficit

AUTHOR(S)
Galbraith, James K.; Darity Jr., William
PUB. DATE
July 1995
SOURCE
Challenge (05775132);Jul/Aug95, Vol. 38 Issue 4, p5
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
This article presents information on the guidelines related to the issues of deficit sustainability in the U.S. The budget deficit is, of course, nothing more than the difference between the expenditures of government and the tax revenues that government receives. Since all three of these variables are measured in current or nominal dollars, one would call this the nominal deficit. The deficit itself is a time-limited concept. The deficit in the year 1995 may be a record, and next year's budget could be balanced. Many commentators speak of the effects of the deficit not only on this year and next, but on the children and grandchildren. The link between deficits today and their consequences in the future lays in the fact that today's government borrowings, which finance the deficit, generally take the form of interest-bearing bonds, which add to the national debt. When one turns to consider the effects of the deficit and the debt on the economy, perhaps the most important conceptual question concerns the role-played by inflation. The authors have been concerned with measuring deficits and changes in the debt in ways that avoid distortions imposed by inflation. Planners of fiscal policy make another type of distinction. It is based, not on inflation, but on employment and capacity utilization. This distinction concerns, not consequences, but causes of the deficit.
ACCESSION #
9507231935

 

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