Macro Musings with David Beckworth cover image

George Hall on the History of the U.S. National Debt and Government Financing

Macro Musings with David Beckworth

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The Barrow Model and the Lucas and Stokie Model

The Barrow model says that what you should do is essentially debt finance those expenditures and then raise taxes sufficiently to cover the interest payments on the debt. In Lucas and Stokey model, it's the bondholders who absorb essentially all the risk. And probably the real world is somewhere in between there.

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