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Public Sector Borrowing

Published online by Cambridge University Press:  26 March 2020

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Extract

Economists may wince when politicians compare public finance to the management of the housekeeping money or businessmen draw analogies from the experience of their firms; but it is then up to the economist to provide some alternative and better framework for public discussion of the Government's borrowing requirement and the size of the national debt.

Type
Articles
Information
National Institute Economic Review , Volume 103 , February 1983 , pp. 50 - 55
Copyright
Copyright © 1983 National Institute of Economic and Social Research

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References

Note (1) page 50 This note was prepared mainly by A. J. C. Britton.

Note (1) page 51 See Blinder, A. S. and Solow, R. M. ‘Analytical foundations of fiscal policy’, in Blinder and Solow et al., The Economics of Public Finance, Brookings Institution, 1973.

Note (2) page 51 It has been argued that the market may correctly predict the necessary rise in tax rates even before it happens, but the means by which the information affects the decisions of individual taxpayers is not very clear.

Note (3) page 51 Quoted in J. C. R. Dow, ‘The Management of the British Economy’, page 224.

Note (1) page 52 One form in which it may accumulate is ‘money’ however defined. If one wants to reflate it would be perverse, and technically quite difficult, to hold down the stock of private sector liquidity.

Note (2) page 52 The advantage of using the national debt as an indicator of total public sector debt is that a very long time series is avail able. The disadvantage is that it is by no means comprehensive and includes official holdings.

Note (1) page 53 ‘Inflation-adjusted saving and sectoral balances’, Bank of England Quarterly Bulletin, June 1982.

Note (1) page 54 In the alternative strategy outlined by Peter Shore MP and others, the effect of reflation on the PSBR does not appear to be a problem because the greater part of the fiscal stimulus comes from expenditure increases and because there is (according to the simulations based on the Treasury model) a further substantial output effect from devaluation.

Note (2) page 54 See Bank of England Quarterly Bulletin, December 1982.