Fixed Deficit Per Head

Abstract

The first point refers to the dynamics of public debt. The government spends a certain amount per head of the active workers on goods and services G = gN with g = const. In addition the government borrows a given sum per head of the active workers B = bN with b = const. Public debt and the budget deficit of the current period add up to public debt of the subsequent period D₊₁ = D + B. Moreover the government levies a lumpsum tax per head of the active workers T = tN with t = const. The government disburses the interest rate r on public debt D, so public interest equals rD. The government budget constraint is B + T = G + rD. Paying heed to the behavioural functions, the identity can be expressed as bN + tN = gN + rD. Here the government fixes purchases per head and the deficit per head, while it accommodates the lumpsum tax.