Abstract
Here the basic model will be extended to include the public sector. The government levies taxes and raises loans in order to finance public consumption and the interest payments on public debt. Public borrowing in turn adds to public debt. The analysis will be implemented within an IS—LM model characterized by the dynamics of public debt, foreign assets, private capital and money wages.
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© 1993 Springer-Verlag Berlin Heidelberg
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Carlberg, M. (1993). Economy with Public Sector. In: Open Economy Dynamics. Contributions to Economics. Physica, Heidelberg. https://doi.org/10.1007/978-3-642-49995-1_3
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DOI: https://doi.org/10.1007/978-3-642-49995-1_3
Publisher Name: Physica, Heidelberg
Print ISBN: 978-3-7908-0708-0
Online ISBN: 978-3-642-49995-1
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