NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

New Directions in the Relationship Between Public and Private Debt

Benjamin M. Friedman

NBER Working Paper No. 2186 (Also Reprint No. r0895)
Issued in March 1987
NBER Program(s):   ME

Until the 1980s the outstanding indebtedness of government and private-sector borrowers in the United States exhibited sufficient negative covariation that total outstanding debt remained steady relative to nonfinancial economic activity. Three hypotheses -- one based on lenders' behavior, one on borrowers? behavior, and one on credit market institutional arrangements -- provide potential explanations for this phenomenon. Since 1980 the U.S. debt markets have departed from these previously prevailing patterns, however, as both government and private borrowing have risen sharply.

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Document Object Identifier (DOI): 10.3386/w2186

Published: Friedman, Benjamin M. "New Directions in the Relation Between Public and Private Debt." Science, Vol. 236, No. 4800, (April 24, 1987), pp. 397-403.

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