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Deficits, debt, and savings structure of OECD countries, with trends from 1965 to 1981 (English)

Much has been made of the possible impact of OECD macroeconomic policy on financial flows available to developing countries. Specifically, the low domestic savings rates in many countries, together with governments' own demands for funds in credit markets, may have raised the overall cost of funds, "crowding-out" developing countries. This paper reviews some of the evidence and concludes that the crowding-out hypothesis is not likely. While government budget deficits and borrowing have indeed been large in recent years, revenues and expenditures, when cyclically adjusted, come very close to being in balance. At non-recessionary levels of income, therefore, expenditure and revenue policies are approximately appropriate. Moreover, a close examination of expenditure categories and taxation policies does not reveal a "structural" imbalance, such that future deficits, or growing deficits, are inevitable. The causes of the decline in OECD savings rates are also examined and are found to lie, to some extent, in disincentives which operate at various levels to discourage savings, but not to structural, or inexorable demographic, causes.


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    Hakim, L. Wallich, C.

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    Staff Working Paper

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    The World Region,

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    Deficits, debt, and savings structure of OECD countries, with trends from 1965 to 1981

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Hakim, L. Wallich, C.

Deficits, debt, and savings structure of OECD countries, with trends from 1965 to 1981 (English). Staff working paper,no. SWP 727 Washington, D.C. : World Bank Group.