宏观济学颜色lecture.pptx

Lecture10GovernmentDebt

InthischapteryouwilllearnaboutthesizeoftheU.S.government’sdebt,andhowitcomparestothatofothercountriesproblemsmeasuringthebudgetdeficitthetraditionalandRicardianviewsofthegovernmentdebtotherperspectivesonthedebtslide1

IndebtednessoftheWorld’sGovernmentsCountryGovDebt

(%ofGDP)CountryGovDebt

(%ofGDP)Japan119Ireland54Italy108Spain53Belgium105Finland51Canada101Sweden49Greece100Germany46Denmark67Austria40U.K.64Netherlands27U.S.A.62Australia26France58Norway24Portugal55slide2

TheU.S.GovernmentDebt-GDPratioslide3RevolutionaryWarCivilWarWorldWarIWorldWarII1.210.80.60.40.20179118111831185118711891191119311951197119912001

TheU.S.experienceinrecentyearsEarly1980sthroughearly1990sDebt-GDPratio:25.5%in1980,48.9%in1993DuetoReagantaxcuts,increasesindefensespendingentitlementsEarly1990sthrough2000$290bdeficitin1992,$236bsurplusin2000debt-GDPratiofellto32.5%in2000Duetorapidgrowth,stockmarketboom,taxhikes2001Thereturnofdeficits,duetoBushtaxcutandeconomicslowdownslide4

TheFiscalFutureTheagingpopulation:lowerbirth

ratesincreasedlifeexpectancyretirementofBabyBoomersslide5

TheFiscalFutureThenumberofpeoplereceivingSocialSecurity,Medicareisgrowingfasterthanthenumberworking,payingtaxesCongressionalBudget

Officeprojections:year debt-GDPratio2030 40%2040 93%2050 206%slide6

ProblemsMeasuringtheDeficit1. Inflation2. Capitalassets3. Uncountedliabilities4. Thebusinesscycleslide7

Measurementproblem1:

InflationToseewhyinflationisaproblem,supposetherealdebtisconstant,whichimpliesazerorealdeficit.Inthiscase,thenominaldebtDgrowsattherateofinflation: ?D/D=?or?D=?DThereporteddeficit(nominal)is?D

eventhoughtherealdeficitiszero.Hence,shouldsubtract?Dfromthereporteddeficittocorrectforinflation.slide8

Measurementproblem1:

In