ABSTRACT
PART II OF THIS BOOK DRAWS THE negative conclusion that excessive use of inflationary finance, financial repression and borrowing from abroad to finance government deficits reduces economic growth. Part III concentrates on the final source, voluntary lending by the domestic private sector, to which governments may turn. Over the period 1979-1993, the median OECD country financed over 50 percent of its government deficit from this source, while the representative developing country has financed only 8 percent of its government deficit in this way.
