The debt to GDP ratio evolves as per below equation. B₁ B₁-1 Yt Y₁-1 = ii. g) B₁-1 Y₁-1 + G₁ - Tt Y₁ Consider a country with a high debt ratio of 200%, a real interest rate of 2%, while the government is running a primary surplus of 2% relative to output. On the basis of the above equation and given numerical information, answer the following questions: i. What growth rate would be required to keep the debt ratio stable? Explain that if expected growth changes to 2% but real interest rate increases to 6%, Fillim

The debt to GDP ratio evolves as per below equation. B₁ B₁-1 Yt Y₁-1 = ii. g) B₁-1 Y₁-1 + G₁ - Tt Y₁ Consider a country with a high debt ratio of 200%, a real interest rate of 2%, while the government is running a primary surplus of 2% relative to output. On the basis of the above equation and given numerical information, answer the following questions: i. What growth rate would be required to keep the debt ratio stable? Explain that if expected growth changes to 2% but real interest rate increases to 6%, Fillim

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter16: The Public Sector

Section16.4: Public Choice Theory

Problem 1YTE

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