Government Deficits, Private Investment and the Current Account: An Intertemporal Disequilibrium AnalysisDevelopment Research Department, Economics and Research Staff, World Bank, 1984 - Budget deficits - 39 pages |
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aggregate supply bond financed classical unemployment regime contract based real cost of capital current account effects deficit spending disequilibrium literature equilibrium version excess supply financed fiscal expansion fiscal expenditure fiscal policy full employment future terms given wages government budget constraint government deficits impact implies income effects increase in government increased first period intertemporal aspects intertemporal optimization K-region Keynesian unemployment labour market clearing locus lower real product marginal product market equilibrium negative PCDE period current account period goods market period government expenditure permanent increase private discount rate private expenditure private investment product of capital pure substitution effects Rate of Interest real consumption wage real product wage real wage rigidities second period terms sector discount rates social discount rates substitution matrix taxes tomorrow temporary increase terms of trade today than tomorrow unit expenditure functions upward price flexibility wage contracts wages and prices World Bank