A simple measure of the distributional burden of debt accumulation

 

Distributional analysis is an important feature in discussions of fiscal policy changes.  While changes in taxes and spending are typically subject to distributional scoring, the distributional costs of changes in net debt are generally ignored. This paper proposes a measure of the distributional burden of servicing the debt. Our primary measure constructs the real annual cost of servicing the debt for households at various levels of income. The distributional burden of the debt depends critically on the level of interest rates and the manner in which the debt service is financed. Using alternative assumptions about financing, we assess the distributional burden of the current level of government debt and the burden of future debt projected to accumulate under current law, current policy, and the Administration’s budget.

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

Aspen
Gorry

 

Matthew H.
Jensen

What's new on AEI

'Just win, baby': The politics of Obamacare
image Ring the alarm bells over Puerto Rico
image US oil production keeps surging, so why haven’t oil and gasoline prices fallen?
image How 'Captain America' conquered China — and why it matters
AEI on Facebook
Events Calendar
  • 18
    MON
  • 19
    TUE
  • 20
    WED
  • 21
    THU
  • 22
    FRI
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled today.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.