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.

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About the Author

 

Aspen
Gorry

 

Matthew H.
Jensen

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Tuesday, September 16, 2014 | 5:00 p.m. – 6:00 p.m.
The Constitution as political theory

Please join us for the third-annual Walter Berns Constitution Day Lecture as James Ceasar, Harry F. Byrd Professor of Politics at the University of Virginia, explores some of the Constitution’s most significant contributions to political theory, focusing on themes that have been largely unexamined in current scholarship.

Wednesday, September 17, 2014 | 8:10 a.m. – Thursday, September 18, 2014 | 1:30 p.m.
Third international conference on housing risk: New risk measures and their applications

We invite you to join us for this year’s international conference on housing risk — cosponsored by the Collateral Risk Network and AEI International Center on Housing Risk — which will focus on new mortgage and collateral risk measures and their applications.

Thursday, September 18, 2014 | 2:15 p.m. – 3:00 p.m.
Speaker of the House John Boehner on resetting America’s economic foundation

Please join us as Speaker John Boehner (R-OH) delivers his five-point policy vision to reset America’s economy.

Friday, September 19, 2014 | 9:15 a.m. – 11:00 a.m.
Reforming Medicare: What does the public think?

Please join us as a panel of distinguished experts explore the implications of the report and the consumer role in shaping the future of Medicare.

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