伯南克宏观经济学ch15学习课件.pptVIP

Government Deficits and Debt The burden of the government debt on future generations Higher tax rates may have to be raised in the future to pay off the debt There would be a large transfer from the poor to the rich Government deficits reduce national saving according to many economists Government Deficits and Debt Budget deficits and national saving: Ricardian equivalence revisited When will a government deficit reduce national saving? S ? Y – C – G It almost certainly does when government spending rises But it may not for a cut in taxes or increase in transfers, national saving declines only if consumption rises (assuming Y is fixed at its full-employment level) Government Deficits and Debt Ricardian equivalence across generations What if the higher future taxes are to be paid by future generations? Then people might consume more today, because they wouldn’t have to pay the higher future taxes But if people care about their children, they’ll increase their bequests to their children so their children can pay the higher future taxes Government Deficits and Debt Departures from Ricardian equivalence What are the main reasons Ricardian equivalence may fail? Borrowing constraints Shortsightedness Failure to leave bequests Non–lump-sum taxes Deficits and Inflation The deficit and the money supply Inflation results when aggregate demand rises more quickly than aggregate supply So budget deficits could be related to inflation (but a one-time jump in the price level) The only way for a sustained inflation to occur is for there to be sustained growth in the money supply Deficits and Inflation The deficit and the money supply Can government deficits lead to ongoing increases in the money supply? Yes, if spending is financed by printing money The revenue that a government raises by printing money is called seignorage Usually, governments don’t just buy things directly with newly printed money, they do so indirectly The Treasury borrows by issuing government bonds Th