Government bills are short dated securities which the government use to finance its public debt. Treasury bills are issued by the Government. Bills don’t have an interest rate, but, allow the buyer to repurchase at a discount and this discount is the effective interest rates. Because bills can easily be traded in at any time, …
Readers Question: The government keeps claiming that their harsh (but very necessary) austerity policies are working and that they have reduced the national debt by 24%, yet your graphs seem to totally disprove this claim. If anything, your graphs seem to show that the national debt is continuing to rise quite steeply, despite the government’s …
One feature of the recent crisis has been the degree to which governments underestimated the forecast rise in government borrowing. The IMF produced a report which looked at forecast debt from 2007, and what debt actually was three years later. In ten selected countries, the increase in the gross debt ratio 31.8 2007 forecast for …
Readers Question: Will Cutting Public spending bring economic growth?Do Countries with lower government spending as a % of GDP have higher economic growth rates? After recent data on -0.7% growth in Q2 2012, several experts offered suggestions for restoring economic growth to the UK. In the Guadian, Sheila Lawlor suggested (link): The UK’s output figures, …
Readers Question: If all Greeks native or from abroad (or any other country in debt) bought their own bonds would this make the debt much lower? No, it would not make the debt any lower. But, it would help to finance the government’s deficit. It would make it easier for the government to avoid a …
Readers Question: when I read the EU spends 50% of their GDP, what does that actually mean? That half of Europe’s taxes are spent on government projects like welfare and entitlements, like taking money from the left hand pocket and putting money in the right hand pocket? I’m lost. Could you please use credit cards …
Readers Question: Why can’t a debt-crippled and deficit-induced state, go on with its most normal economic activities (by borrowing the needed money to make sure that no or at the most, unproductive spendings are curbed, no tax rates up, and no austerity measures) in a bid to emerge out of debt & deficit potholes sooner …
Readers Question: Is large government spending bad for economic growth? to what extent does empirical evidence support this assertion? How Government Spending Might Lead to Lower Economic Growth Higher spending leads to higher taxes. Higher income taxes may discourage people from working. High corporation tax might discourage firms from setting up in that country. (e.g. …