--- Peter Kriesler <P.Kriesler@unsw.edu.au> wrote:
>
>
>
> OK, so what you are saying is that if the government
> borrows from the
> private sector by selling bonds, then, if we rule
> out any interest rate
> effect, there will be no change to the level of
> aggregate demand. I can
> accept that. However, if that is the case, then what
> problem is there with
> government borrowing?
None, it's just not an imperative for spending
as most think. Budget constraint, etc. and all that.
If the government increases
> expenditure, then, I
> agree, "financing" is irrelevant. However, if it
> makes people happy, to
> have an equivalent amount of borrowing and it has no
> impact, then what is
> wrong with that?
Nothing at all, apart from a waste of accounting
time, and all those bond traders that could be
otherwise employed curing cancer, etc.
warren
>
>
> Peter Kriesler
> School of Economics
> UNSW
> Sydney 2052
> http://economics.web.unsw.edu.au/people/pkriesler/
>
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Received on Sat Feb 8 13:55:33 2003
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