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Questions tagged [government-debt]

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Repudiate enemy country's holdings of our government's debt

The Chinese central bank for example holds over $1T in US Treasuries. In the event of a war between China and the US, could the US simply repudiate this debt? What would be the consequences of such ...
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When a central bank buys government securities, is this exactly equivalent to printing money?

When a country's central bank buys that same country's government securities, is this exactly equivalent to printing money? There seems to be no agreement on this. Federal Reserve FAQ: Is the ...
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Consequences of a US sovereign default

The US Treasury website states: Failing to increase the debt limit would have catastrophic economic consequences. It would cause the government to default on its legal obligations – an ...
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General government debt vs central government debt?

The IMF's Global Debt Database (Excel, Stata) lists data for: General government debt (GG); and Central government debt (CG). What are the conceptual differences between these two items? For ...
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Debt-to-GDP ratio in connection to inflation

On this segment of the Tucker Carlson show, interviewing Robert Hockett, as an advisor to Rep. Octavio-Cortez on the proposed Green New Deal, the following interchange ensues: Tucker: "On the low ...
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Can a government invest in public companies so their dividends can finance the government

Is it possible that a country could use the money in its sovereign wealth fund to invest in different country's Stock Market and use the dividends to finance its government thus increasing spending ...
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Can debt to GDP ratio be reduced transfering debt to local autorities?

It is my understanding that not only government but also local authorities issue bonds. This answer on Money and Finance Stack Exchange suggests that such debts are not accounted in the computation of ...
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Is debt servicing in the structural or cyclical budget balance?

Are the interest payments on government debt to be considered in the structural or the cyclical budget balance? I think, since it's independent on the state of the economy, then they should go to the ...
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Does the Italian national debt really go all the way back to Mussolini's excessive prewar spending?

The WWI & WWII debt is quite well defined in the UK for example and quite shocking how many years it took to pay off. Somebody told me that the Italian debt crisis really goes all the way back ...
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Why is the ten year interest rate lower for Spain/UK bonds than for US?

Take a look at the government bonds interest rates, https://www.marketwatch.com/. For the US is 2.9, and for Spain and UK are 1.5 and 1.1 respectively. Spain is an economy with high unemployment, a ...
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Evolution of GDP to debt ratio

Is it possible for an entity (say a state, e.g. USA) to keep a constant GDP/debt ratio with a monotonically increasing debt. I should probably mention that I am not an economist (physics and c.s ...
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Why do we say the US is in debt to China?

Apple import iPhones manufactured by factories in China. Apple has to pay for these Chinese manufacturers. So, Apple should be in debt with Chinese manufacturers. But why do we say the US government ...
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Where can I get national debt data?

I'm trying to find out about the history of South Africa's government debt. However, I couldn't manage to find suitable literature or websites showing the history. It is also very difficult to find ...
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Why can't countries immediately stop the deficit?

Governments often say things like "we will reduce the deficit by 2025". Why can't they simply eliminate the deficit immediately by spending less than the taxes they receive? Surely if a country is ...
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Relevance of government liabilities to GDP

After Malaysia's national debt was [reassessed][1], its totaled $250bn along with other government liabilities. Now, I'm having trouble understanding the direct relevance of the ratio of goverment ...
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What portion of our annual deficit is financed by bonds?

What portion of our annual deficit is financed by bonds? Compared to say, treasury notes (such as checks and printed currency), or private lending?
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Relation between growth rate of GDP and real interest rate for sustainable debt-to-GDP ratio

Why is the relation between the growth rate of GDP and the real interest rate important for sustaining the government the debt-to-GDP ratio ?
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Electric Vehicle effects on family and macro-economics?

What happens economically when cars last 1000,000 miles on cheap local energy? EV's can save an average family 2000 dollars a year on energy costs, and 2000 per year on automotive investment. That'...
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Why is national debt bad if the central bank can keep buying bonds?

When I read about national debt, it's usually about how debt is bad because with too much debt, debtors would demand higher interest rates. Eventually the government can't pay the interest, defaults, ...
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Malaysia's national debt - who's correct?

Malaysia recently changed governments. The new finance minister claimed the national debt is actually RM1.087 trillion, and that the previous government had understated the national debt by some RM400 ...
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Are principal payments on government bonds included in normal budget spending?

If I look, for example, at the UK government's Autumn 2017 budget document the spending piechart has a wedge which says 'net debt interest £41bn'. I notice the wording says 'interest' and not ...
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How does IS-LM model reduced investor confidence?

I am doing an essay on how a sovereign debt rating downgrade to junk status affects the economy. I wanted to use a theoretical framework to think about it, and seeing as an increase in the interest ...
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Do countries have to run on deficits? What is their possible economic future?

Do countries have to run on deficits? Is their future to behave and act like big companies that produce goods and services?
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Did the Nixon shock cause skyrocketing real estate prices in the US?

Ca. 1970 the prices of real estate started skyrocketing in the US: Real estate prices chart. Same with gold: Gold prices chart. So my conclusion is that real estate did not increase in value, it was ...
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Debt bearing capacity

In times of low yields and the prospect of rising yields, I asked myself if the european countries can ceteris-paribus cope with rising yields. Is there a way to calculate the effect of rising yields (...
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Is there any nation which doesn't have any external debt?

China and the US alone have a staggering 15 trillion dollars in debt. Is there any country which has no external debt and if so, then when did they pay back their debt?
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Why shouldn't governments use Forex reserve to pay their debts?

India has around 470 billion USD in debt and has around 400 billion USD in forex reserves. So why should India or any other nations shouldn't use their forex reserves to pay off their external debt ?
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The link between US debt of $250 Trillion dollars and “Promise to pay” on US Dollar currency

Giving background to my question: a prominent economist was discussing the problems of the US currency and predicting it's collapse, said the following: "...a currency is a store of value, it's a ...
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How does national debt work?

I'm trying to understand national debt. I gather that the United States, and other nations with central banks, accrue debt basically by printing new money at their central bank. This, I hypothesize, ...
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Are interest included in the computation of government debt

I am completely new to economics and I have troubles understanding how the government debt of countries is computed. Imagine government of country A issue some 10 years bond of the value of 100 ...
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Can a spending freeze solve the problem of the Italian enormous government debt?

In view of the upcoming Italian general election, I've been reading the program of a party (please let me know in the comments whether I can/should mention its name), and in a section of it they ...
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Connection between low demand for US Treasuries and expectation of inflation

The expectations for inflation and fear of accelerated rate hikes on the part of the Fed seem to be driving the stock market correction in the US this February, 2018, and as a result of the jobs ...
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Why would China and Russia selling the US' debt ruin the economy?

I was listening to an interview with David Harvey and he mentioned that if Russia and China were to sell the debt owed to them by the US, the US economy would take a serious dive. How would they sell ...
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Question regarding to Government Debt in Williamson Textbook

I am using the Williamson Macroeconomics textbook to look over a chapter on Monetary Policy and Banking (Chapter 12, 5th Edition). For a bit of context, the author specifices the government budget ...
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Ricardian vs Non-Ricardian policy identification

I am reading Sala (2004) and I think I have found a mistake in the paper. On page 7 the author argues that one can differentiate between Ricardian and Non-Ricardian policy regimes by considering ...
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Consolidated budget constraint

This is an excerpt from a data source that I am using. According to the authors it has been created from accounting identities such that it matches theoretical variables used in macroeconomics. For ...
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Since 1980, in which years has the US debt-to-GDP declined and why?

In other words, what were the factors in the reduction of the debt-to-GDP ratio? Why did the ratio decrease during some booms and not others?
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Why doesn't the government create money, spend it for free without interest, and recollect it with taxes?

I was thinking of a better monetary system, and here is what I came up with it. I'd like to know if this would work, as I see if offers many advantages over our debt-based monetary system today. A ...
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Do governments issue debt at low r to pay debt with high r?

I have a question. I know governments do debt rollover from time to time. But, to me it seems logical that governments do this when the interest rate of bonds they have issued in the past is higher ...
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Why can we finance government deficit by having a trade deficit?

I encountered an example question regarding government deficit as follows: $G-T=(S-I)-(X-M)$ where $G$ is government spending, $T$ is net tax (tax minus transfer payment), $S$ is total private ...
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Extension on the suspension of national debt ceiling

So I just want to make sure i got this right, The national debt ceiling was suspended, i.e. the government can now freely spend until Dec.8, which they "say" was for providing $15bn in hurricane ...
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Why did the Greek-bailouts 'Fail' vs Portuguese' Succeed?

Greece has required several bail-outs and is on the brink of falling back into recession. The Portugese economy has seemingly recovered. Why has recovery gone so well in Portugal but failed ...
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How have central banks been injecting currency after crises since 2007?

In an article by Jean-Michel Naulot about the 2007–2008 financial crisis, I read (my translation): Although central banks had an exemplary reaction at the time of the [2007–2008] crisis, they ...
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Which measures are there to evaluate a country economical development? [duplicate]

I'm familiar with the measures of Gross domestic product (GDP PPP) total, per capita and GDP nominal total and per capita. But I'm not sure if these measures evaluate the economical development of a ...
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Difference equation in OLG framework

This question is also regarding Aiyagari and Gertler (1985). We have the governments flow budget contraint: $\frac{B_{t-1}}{p_{t}} + \bar{g}w = \tau_{y}(t)+\tau_{o}(t) + \frac{M_{t}-M_{t-1}}{p_{t}} + ...
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OLG - Government Budget Constraint

Consider a two period OLG model where each young agent recieves an endowment of $w$ units of the single commodity good in the 1st period of his/her life, and nothing in the second period. Each ...
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What would happen if the US defaults on its debt?

As has been widely discussed already, the situation in Greece is considered more serious than in the US, as they have dollar-denominated debt and can only print Greek currency. The US, has the benefit ...
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Causes of recent UK Deficit

In 2008 the UK deficit was around £10Bn - in 2010 it had reached around £100Bn. I realise this was due to the "global recession" but exactly why did the deficit grow so much? My understanding is the ...
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How much does a public sector pay rise actually cost the UK government?

This is something that's in the UK news at the moment. Public sector workers have experienced a 1% annual cap on pay increase since 2013. Government ministers are appearing on TV saying that they don'...
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Government debt constraint

I am reading Some Unpleasant Monetarist Arithmetic (Sargent and Wallace, 1981) and I had some questions about a claim made by the authors. They say: The public's demand for interest-bearing ...