Public Debt as Private Wealth

Government bonds are interest-bearing assets. Increasing public debt increases income, wealth, and consumption demand. The smaller government expenditure is, the larger consumption demand must be in equilibrium, and the larger must be public debt. Conversely, lower public debt implies higher government spending and taxation. Public debt plays, thus, an important role in establishing equilibrium. It distributes output between consumers and government. In case of insufficient demand, a larger public debt entails higher consumption and less public spending. If upper bounds on public debt are introduced (as in the Maastricht treaty), such constraints place lower bounds on taxation and public spending or may even rule out the existence of macroeconomic equilibrium altogether. Domar(1944) and Gehrels(1957) have discussed similar issues in an unemployment setting. In contrast, this note considers the full employment case and looks at adjustments in debt, taxes and government spending that preserve full employment. The explicit modelling of some adjustment processes that have not been considered in the earlier contributions leads to somewhat different and, in a sense, more "debt-friendly" results

Public Debt as Private Wealth

Government bonds are interest-bearing assets. Increasing public debt increases income, wealth, and consumption demand. The smaller government expenditure is, the larger consumption demand must be in equilibrium, and the larger must be public debt. Conversely, lower public debt implies higher government spending and taxation. Public debt plays, thus, an important role in establishing equilibrium. It distributes output between consumers and government. In case of insufficient demand, a larger public debt entails higher consumption and less public spending. If upper bounds on public debt are introduced (as in the Maastricht treaty), such constraints place lower bounds on taxation and public spending or may even rule out the existence of macroeconomic equilibrium altogether. Domar(1944) and Gehrels(1957) have discussed similar issues in an unemployment setting. In contrast, this note considers the full employment case and looks at adjustments in debt, taxes and government spending that preserve full employment. The explicit modelling of some adjustment processes that have not been considered in the earlier contributions leads to somewhat different and, in a sense, more "debt-friendly" results

Public debt management

Debt management

PUBLIC DEBT MANAGEMENT

This paper examined the issue of managing public debt and analyses the present situation of public debt in Pakistan. When the government resorts to borrowing instead of introducing additional tax measures, to finance the budget deficit, it creates liability on itself known as public debt. Public debt accumulates over time if deficit in the budget presists for a long period of time. Growing public debt is a global phenomenon. Contemporary economic wisdom does not consider public debt a major problem per se; rather problem is the mismanagement and unsustainability of the debt. In Pakistan, due to improper use of debt, the debt management has become a much serious problem. Presitent mismanagement of debt made it unsustainable, which is threatening to cause further slowdown in the declining growth rate of the country. Off course, current exercises of debt restructuring could not help improve our debt to GDP ratio immediately: however, it has improved some short run debt burden indicators significantly. It is hoped that these reschedulings/restructuring will help us in increasing the investment and to promote growth. By improving our debt managemet process we can ensure it.

The Debt Limit and the Constitution: How the Fourteenth Amendment Forbids Fiscal Obstructionism

The statutory debt limit restricts the funds that can be borrowed to meet the government\u27s financial obligations. On the other hand, the Fourteenth Amendment\u27s Public Debt Clause mandates that all the government\u27s financial obligations be met. This Note argues that the Public Debt Clause is violated when government actions create substantial doubt about the validity of the public debt, a standard that encompasses government actions that fall short of defaulting on or directly repudiating the public debt. The Note proposes a test to determine when substantial doubt is created. This substantial doubt test analyzes the political and economic environment at the time of the government\u27s actions and the subjective apprehension exhibited by debt holders. Applying this test, this Note concludes that Congress\u27s actions during the 1995–96 and 2011 debt-limit debates violated the Public Debt Clause, though Congress\u27s conduct during the debate over the debt limit in 2002 did not. And under a departmentalist understanding of executive power, a conclusion of this nature would be the basis for the president to ignore the debt limit when congressional actions create unconstitutional doubt about the validity of the public debt

THE USE OF COMPUTER APPLICATIONS IN THE STUDY OF ROMANIA'S PUBLIC DEBT

Total public debt represents all monetary obligations of the state (government, public institutions, financial, administrative-territorial units) at a time, resulting from internal and external loans (in lei and foreign currencies) contracted on short, medium and long term, and the state treasury and its own obligations for the amounts advanced temporarily to cover the budget deficit. Loans may be contracted by the state through the Ministry of Finance, in his own name or guaranteed by it. Public debt is expressed in local currency or foreign currency, depending on where the contracts and loan conditions. In order to evaluate Romania\'s public debt, obligations denominated in another currency than the national currency is calculated using the exchange rate of National Bank of Romania. Also, total public debt of a country can be expressed in absolute values (to know the load on that country\'s economy which is subject to its creditors), the relative values as a percentage of GDP (to allow comparison over time and between countries) and the average size per capita (to allow comparisons and analysis in time and space). Total public debt is calculated and separately manages its two forms, namely domestic public debt and external public debt. Ministry of Finance shall prepare and submit annually to the Government for approval and to Parliament for information, report on public debt, which contains information on government debt portfolio, debt service, public indebtedness indicators and information about primary and secondary market securities state and how to implement the medium-term strategy in managing government debt for the previous year. In order to make comparisons quick and effective on public debt dynamics in Romania, Excel 2010 has new features such as charts and sparkline slicers' features which can help discover trends and statistics in accordance with existing data. The aim of this article is accurate assessment of Romania\'s public debt and its evolution in the economic crisis in recent years, using computer applications. As a novelty, it is proposed to use charts sparkline (Small diagrams that fit in a cell) to visually summarize data trends in a small space, but in a visual form meaningful and understandable.report on public debt, public debt dynamics, computer applications, professional-looking diagrams, sparkline charts

Public Debt as Private Wealth

Government bonds are interest-bearing assets. Increasing public debt increases income, wealth, and consumption demand. The smaller government expenditure is, the larger consumption demand must be in equilibrium, and the larger must be public debt. Conversely, lower public debt implies higher government spending and taxation. Public debt plays, thus, an important role in establishing equilibrium. It distributes output between consumers and government. In case of insufficient demand, a larger public debt entails higher consumption and less public spending. If upper bounds on public debt are introduced (as in the Maastricht treaty), such constraints place lower bounds on taxation and public spending or may even rule out the existence of macroeconomic equilibrium altogether. Domar(1944) and Gehrels(1957) have discussed similar issues in an unemployment setting. In contrast, this note considers the full employment case and looks at adjustments in debt, taxes and government spending that preserve full employment. The explicit modelling of some adjustment processes that have not been considered in the earlier contributions leads to somewhat different and, in a sense, more "debt-friendly" results.stabilization policy; government debt; public debt; functional finance; Maastricht treaty; Ricardian equivalence

Markov-Perfect Optimal Fiscal Policy: The Case of Unbalanced Budgets

We study optimal income taxation and public debt policy in a neoclassical economy populated by infinitely-lived households and a benevolent government. The government makes sequential decisions on the provision of a valued public good, on income taxation and the issue of public debt. We characterize and compute Markov-perfect optimal fiscal policy in this economy with two payoff-relevant state variables: physical capital and public debt. We find two stable, steady-state equilibria: one with no income taxation and positive government asset holdings, and another with positive taxation and public debt issuances. We prove that the two steady states are associated with different policy rules, which implies a multiplicity of (expectation-driven) Markov-perfect equilibria.Optimal taxation; optimal public debt; Markov-perfect equilibrium; Time-consistent policy