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The Crash and Ricardo: Does the US Budget Deficit Matter?
Author(s) -
Wood Geoffrey E.,
Pradham Mahmoud
Publication year - 1988
Publication title -
economic affairs
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.24
H-Index - 18
eISSN - 1468-0270
pISSN - 0265-0665
DOI - 10.1111/j.1468-0270.1988.tb01543.x
Subject(s) - crash , deficit spending , ricardian equivalence , economics , government (linguistics) , government budget , equivalence (formal languages) , fiscal deficit , keynesian economics , macroeconomics , philosophy , fiscal policy , public finance , linguistics , computer science , debt , programming language
How important was the American budget deficit as a cause of the crash? Geoffrey Wood and Mahmoud Pradham of the City University Business School argue that the deficit was not even a contributory cause. A modern version of the‘Ricardian Equivalence Theorem’suggests that the effect of government borrowing on the economy can be greatly exaggerated.