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DEFICIT FINANCING—ANYONE FOR A NEW BALL GAME?
Budget deficits have become a part of life for almost all economies around the world. That has, however, not made it any more acceptable or respectable as a fiscal practice. It has often been presented as some kind of Asian plague from which governments would best be advised to keep away. Yet, like Banquo's ghost, deficits keep popping up all the time and in almost every country.
There is little definitive evidence in economic history to establish that deficit financing invariably leads to economic busts or booms. Such one-to-one causation for good or bad does not exist. No country has banned deficit financing as a fiscal no-no for all time. There are countries that have done well when they have ...
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