New Directions in the Relationship between Public and Private Debt

31 Pages Posted: 9 Jul 2007 Last revised: 24 Jun 2010

See all articles by Benjamin M. Friedman

Benjamin M. Friedman

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: March 1987

Abstract

Until the 1980s the outstanding indebtedness of government and private-sector borrowers in the United States exhibited sufficient negative covariation that total outstanding debt remained steady relative to nonfinancial economic activity. Three hypotheses -- one based on lenders' behavior, one on borrowers? behavior, and one on credit market institutional arrangements -- provide potential explanations for this phenomenon. Since 1980 the U.S. debt markets have departed from these previously prevailing patterns, however, as both government and private borrowing have risen sharply.

Suggested Citation

Friedman, Benjamin M., New Directions in the Relationship between Public and Private Debt (March 1987). NBER Working Paper No. w2186. Available at SSRN: https://ssrn.com/abstract=346988

Benjamin M. Friedman (Contact Author)

Harvard University - Department of Economics ( email )

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