Government Debt, Economic Activity, and Transmission of Economic Disturbances
This paper analyzes the effects of government debt on output and the trade balance in a two-country rational expectations model of the world economy. It is shown that perceived changes in government debt do not affect the level of economic activity but unperceived changes in the home country's...
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| Veröffentlicht in: | Journal of money, credit and banking credit and banking, 1987-08, Vol.19 (3), p.361-375 |
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| container_end_page | 375 |
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| container_title | Journal of money, credit and banking |
| container_volume | 19 |
| creator | Koray, Faik |
| description | This paper analyzes the effects of government debt on output and the trade balance in a two-country rational expectations model of the world economy. It is shown that perceived changes in government debt do not affect the level of economic activity but unperceived changes in the home country's government debt are are correlated positively with her output and negatively with her trade balance. Unperceived increases in the foreign country's government debt, however, have a positive impact on the home country's output and the trade balance. Empirical evidence for the U.S. is consistent with most of the implications of the model. (Printed by permission of the publisher.) |
| doi_str_mv | 10.2307/1992082 |
| format | Article |
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| fulltext | fulltext |
| identifier | ISSN: 0022-2879 |
| ispartof | Journal of money, credit and banking, 1987-08, Vol.19 (3), p.361-375 |
| issn | 0022-2879 1538-4616 |
| language | eng |
| recordid | cdi_proquest_journals_195354729 |
| source | Periodicals Index Online; JSTOR Archive Collection A-Z Listing |
| subjects | Analysis Balance of trade Debt Deficit financing Economic fluctuations Economic growth rate Economic impact Economic research Economic theory Government expenditures Hypotheses International economics Market value Mathematical models National debt Open economies Output Public debt Public debts Studies |
| title | Government Debt, Economic Activity, and Transmission of Economic Disturbances |
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