Abstract
In section 1, we postulated that the government fixes the deficit ratio. In section 3, instead, we shall suppose that the government fixes the deficit per head. Let us begin with the dynamics of public debt. The government buys a certain volume of goods and services per head G = gN with g = const. In addition the government borrows a given amount per capita B = bN with b = const. The budget deficit in turn augments public debt \(\dot{D}=B\). Apparently b denotes the deficit per head. Moreover the government collects a lumpsum tax T = tN with t = const. The government pays the interest rate r on public debt D, so public interest equals rD. The government budget constraint is B + T = G + rD. Taking account of the functional relationships, the identity can be expressed as bN + tN = gN + rD. Here the government presets purchases per head and the deficit per head, while it adjusts the lumpsum tax.
Keywords
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
This is a preview of subscription content, log in via an institution.
Buying options
Tax calculation will be finalised at checkout
Purchases are for personal use only
Learn about institutional subscriptionsPreview
Unable to display preview. Download preview PDF.
Author information
Authors and Affiliations
Rights and permissions
Copyright information
© 1995 Physica-Verlag Heidelberg
About this chapter
Cite this chapter
Carlberg, M. (1995). Fixed Deficit Per Head. In: Sustainability and Optimality of Public Debt. Contributions to Economics. Physica-Verlag HD. https://doi.org/10.1007/978-3-642-46965-7_5
Download citation
DOI: https://doi.org/10.1007/978-3-642-46965-7_5
Publisher Name: Physica-Verlag HD
Print ISBN: 978-3-7908-0834-6
Online ISBN: 978-3-642-46965-7
eBook Packages: Springer Book Archive