RE: Re: Up From Debt Reduction

["Max Sawicky" <sawicky@xxxxxxxxxxxxxxxx>]

I presume the latter effect more than offsets any
fiscal drag, but the advocates of debt reduction
are often not very explicit about their theory.
If memory serves, in basic n-c growth theory, a
lower interest rate could increase the level of
investment but not change the growth *rate* beyond
a one-time GDP increase to a new trend.

mbs



Max, in your article you say that Penner says that debt reduction
caused a slight amount of growth.  Does he mean that debt
reduction had a greater effect than the corresponding drop in
spending/taxation; or that debt reduction => interest rate
declines that => a slight growth?

Max Sawicky wrote:

> http://www.populist.com/01.16.sawicky.html

--

Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail michael@xxxxxxxxxxxxxxxxx