TY  - JOUR
AU  - Ball,Laurence
AU  - Mankiw,N. Gregory
TI  - What Do Budget Deficits Do?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5263
PY  - 1996
Y2  - April 1996
UR  - http://www.nber.org/papers/w5263
L1  - http://www.nber.org/papers/w5263.pdf
N1  - Author contact info:
Laurence M. Ball
Department of Economics
Johns Hopkins University
Baltimore, MD 21218
Tel: 410/516-7605
Fax: 410/516-7600
E-Mail: lball@jhu.edu

N. Gregory Mankiw
Department of Economics
Littauer 223
Harvard University
Cambridge, MA  02138
Tel: 617/495-4301
Fax: 617/495-7730
E-Mail: ngmankiw@fas.harvard.edu
AB  - This paper discusses the effects of budget deficits on the economy in four steps.  First, it reviews standard theory about how budget deficits influence saving, investment, the trade balance, interest rates, exchange rates, and long-term growth.  Second, it offers a rough estimate of the magnitude of some of the effects. Third, it discusses how budget deficits affect economic welfare. Finally, it considers the possibility that continuing budget deficits in a country could lead to a 'hard landing' in which the demand for the country's assets suddenly collapses.
ER  -