Discussion Paper

No. 2015-59 | September 01, 2015
Government Deficits in Large Open Economies: The Problem of Too Little Public Debt

Abstract

Large and growing levels of public debt in the United States, United Kingdom, Japan and the Euro Area raise new interest in the cross-country effects of a large open economy's deficits. The authors consider a dynamic optimising model with costly tax collection and exogenously given public spending and initial debt. They ask whether the externalities associated with an individual country's deficits are positive or negative. They characterise the path of taxes in the Nash equilibrium where policy makers act nationalistically and compare this outcome to the global optimal outcome.

JEL Classification:

E62, F42, H21

Assessment

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Links

Cite As

Willem H. Buiter and Anne C. Sibert (2015). Government Deficits in Large Open Economies: The Problem of Too Little Public Debt. Economics Discussion Papers, No 2015-59, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2015-59


Comments and Questions


Anonymous - Report
October 05, 2015 - 14:58

See attache file


Willem H. Buiter and Anne C. Sibert - Reply to Referee by Authors
October 25, 2015 - 19:02

Our response to the Referee's comments is attached as a pdf file.


Anonymous - Invited Reader Comment
January 05, 2016 - 10:25

see attached file