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A note on the sustainability of primary budget deficits

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  • Nielsen, Soren Bo

Abstract

This note studies the sustainability of primary budget deficits in a situation where the public sector has also incurred debt to the private sector. It shows that if the rate of pure time preference is small relative to the population growth rate, if public consumption constitutes a modest fraction of output, and if the primary budget deficit is sufficiently small, then it is also sustainable, and the associated steady state is locally stable.
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Suggested Citation

  • Nielsen, Soren Bo, 1992. "A note on the sustainability of primary budget deficits," Journal of Macroeconomics, Elsevier, vol. 14(4), pages 745-754.
    • Handle: RePEc:eee:jmacro:v:14:y:1992:i:4:p:745-754
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    Citations

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    Cited by:

    1. Neil Rankin & Barbara Roffia, 2003. "Maximum Sustainable Government Debt in the Overlapping Generations Model," Manchester School, University of Manchester, vol. 71(3), pages 217-241, June.
    2. repec:zbw:bofrdp:2005_026 is not listed on IDEAS
    3. Cuddington, John T., 1997. "Analyzing the sustainability of fiscal deficitsin developing countries," Policy Research Working Paper Series 1784, The World Bank.
    4. André Fourçans & Thierry Warin, 2007. "Stability and Growth Pact II: Incentives and Moral Hazard," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 10(1), pages 51-62.
    5. Futagami, Koichi & Shibata, Akihisa, 1998. "Budget Deficits and Economic Growth," Public Finance = Finances publiques, , vol. 53(3-4), pages 331-354.
      • Futagami, Koichi & 二神, 孝一 & フタガミ, コウイチ & Shibata, Akihisa & 柴田, 章久 & シバタ, アキヒサ, 2003. "Budget Deficits and Economic Growth," Discussion Paper 133, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    6. Joao L.M. Amador, 2000. "Fiscal Policy And Budget Deficit Stability In A Continuous Time Stochastic Economy," Computing in Economics and Finance 2000 27, Society for Computational Economics.
    7. Thierry Warin, 2005. "Stability and Growth Pact: An Index to Trigger an Early Warning Earlier?," Middlebury College Working Paper Series 0502, Middlebury College, Department of Economics.
    8. Puhakka, Mikko, 2005. "The effects of aging population on the sustainability of fiscal policy," Research Discussion Papers 26/2005, Bank of Finland.
    9. Puhakka, Mikko, 2005. "The effects of aging population on the sustainability of fiscal policy," Bank of Finland Research Discussion Papers 26/2005, Bank of Finland.
    10. Thierry Warin, 2005. "A Note on International Fiscal Policy Practices," Middlebury College Working Paper Series 0520, Middlebury College, Department of Economics.

    More about this item

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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