I presume the latter effect more than offsets any
fiscal drag, but the advocates of debt reduction
are often not very explicit about their theory.
If memory serves, in basic n-c growth theory, a
lower interest rate could increase the level of
investment but not change the growth *rate* beyond
a
From Up From D.R
A third tidbit in the CBO projections is the fate of public debt after Bush's tax
cut. By 2011, public debt with or without the tax cut is still as low as thought
possible. How could this be? Because the post-tax cut surplus is still big enough to
eliminate all Federal debt.
There is a minor wonk-controversy over how much
of the public debt is easily liquidated. The
Repugs say the last $800 billion or so would cost
too much to buy back, since the holders of this
debt want very much to have safe assets and would
demand a premium to let them go. Then our hero
A.
Max, in your article you say that Penner says that debt reduction
caused a slight amount of growth. Does he mean that debt
reduction had a greater effect than the corresponding drop in
spending/taxation; or that debt reduction = interest rate
declines that = a slight growth?
Max Sawicky wrote:
http://www.populist.com/01.16.sawicky.html
