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- Title
THE NATIONAL DEBT CONTROVERSY.
- Authors
Holcombe, Randall G.; Jackson, John D.; Zardkoohi, Asghar
- Abstract
Some analysts have argued that the burden of public debt is passed on to the future because public debt competes for funds in private capital markets, which lowers capital accumulation. Others argue that using debt finance rather than taxation will have no real effects because an increase in debt will be offset by an equal increase in savings, in anticipation of the higher future taxes that will be needed to service the debt. An empirical test finds that savings changes are only about 20 percent of debt changes, ceteris paribus, implying that most of the burden of the debt is passed on to the future through reduced capital accumulation.
- Subjects
PUBLIC debts; CAPITAL market
- Publication
Kyklos, 1981, Vol 34, Issue 2, p186
- ISSN
0023-5962
- Publication type
Article
- DOI
10.1111/j.1467-6435.1981.tb01183.x