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Originally Posted by lucid
Hi Voltigeur. I am curious about how one makes this assessment. Comparing it to the debt/GDP ratios of other countries seems all relative and somewhat pointless. What objective measures are used to assess this? I guess projected growth and interest rates are important, but how exactly? Can you point me to a source that explains this in details? Thanks.
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You can read Shaviro "Do Deficits Matter". There's also a number of papers (econometrical) that have mixed results at finding any causality b/w 'rates and deficits.
The Economist had a good summary on the debate several years ago but I can't find it readily (did a site search, "deficit" brings up 000's of entries).
Here's the federal deficit as % / GDP [myriad ways to define a deficit!] - but one can see we had a lot less debt around the time of the severe inflationary and recessionary period in the early 1980s. Bottom line: low federal debt / GDP does not equate to good or bad economic periods. It's more complex than that... but then we'd be delving into deeper economic philosophy and debate than I want to conduct in my spare time
Source: NDR, CBO