How Large A Federal Budget Deficit Can We Sustain?
Author InfoDOUGLAS H. JOINES Abstract Governments may be unable to sustain large budget deficits indefinitely. Investors may impose limits on the amount of government debt-relative to gross national product (GNP)-they are willing to hold and thus limit the size of the deficit a government can sustain. The size of sustainable nominal deficits, then, would depend on the growth rate of nominal GNP. Reasonable assumptions regarding the GNP growth rate imply that the federal government can main tain its debt/GNP ratio at historically typical levels if it runs deficits of $175 billion in the near term and even larger amounts during future years. Copyright 1991 Western Economic Association International. Download InfoTo download: If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on th
