Can anyone explain why in some textbooks a government deficit causes a shift to the left of the supply curve (Mankiw) and in others a shift to the right of the demand curve (Krugman).
Furthermore,how does each of these models reconcile with a government selling bonds? Selling bonds is borrowing money. This seems logically like an increase in demand (Krugman)- the goverment is demanding more loanable funds. However, it is budget deficit financing therefore somehow it must be shifting the supply curve to the left If you take the Mankiw textbook weltanschauung. How can we reconcile the two?