The Immediate Effects of Budget Deficits
Budget deficits have many effects. But they all follow from a single initial effect: deficits reduce national saving. National saving is the sum of private saving (the after-tax income that households save rather than consume) and public saving (the tax revenue that the government saves rather than spends). When the government runs a budget deficit, public saving is negative, which reduces national saving below private saving.Harvard
What Do Budget Deficits Do?
Laurence Ball and N. Gregory Mankiw
(h/t Subborn Mule)
Anyone see a problem here? :o
Some discussion at Stubborn Mule here.
