ABSTRACT

Viewed from the standpoint of Keynesian theory, national deficits are sometimes good and sometimes bad. Deficits are good in recessionary periods when lower taxes and increased expenditures stimulate the economy, but they are bad in boom periods, when they overstimulate the economy. Deficits that exist only in recessionary periods are called cyclical deficits. Deficits that persist in good times are called structural deficits.