government budget constraint

Since Donald Trump became president, his core economic agenda has been sidetracked repeatedly by so-called cultural issues. However, now the administration is stepping up its tax reform effort. Even so, other issues threaten to derail this…

Introducing a currency in parallel to the euro could help Greece repay its external debt and resume economic activity. This second column in a two-part series evaluates the different options and their effects on aggregate demand and fiscal…

To prevent it from defaulting on its debt, the Greek government might need to introduce a new domestic currency, in parallel to the euro. This column, the first in a two-part series, compares the current proposals for a parallel currency…

Deficits present governments with the sole challenge of making good on future promises without inflation. For nations sovereign in currency, the constraint is inflation, not solvency.

Abenomics has been very successful in goosing the Japanese economy thus far. However, the question remains whether this success will be short-lived or durable. I believe it is likely to be short-lived because of the policy constraints that…

I was on the Daily Ticker with Lauren Lyster talking about Japan yesterday. My view is that there is no material negative change in Japan's sovereign debt outlook nor will there be in the medium term because of Abenomics. The video is at…

the US uses government money as the currency of account, there is no government budget constraint in the short or long run. Though even so-called Keynesians like Paul Krugman act like there is. The reality is that government can spend as…

Last week we examined Milton Friedman’s version of Functional Finance, which we found to be remarkably similar to Abba Lerner’s. The only problem with Friedman’s analysis is that he did not account for the external sector: he wanted a…