You can’t use your GDP to pay off debts. Wouldn’t it be better if we used how much % of a goverments budget goes towards servicing debts?
You can’t use your GDP to pay off debts. Wouldn’t it be better if we used how much % of a goverments budget goes towards servicing debts?
Correct me if I am wrong but isn’t this sort of the deficit.
Revenue-expenditures is deficit in the simplest terms I understand
In the guide below they don’t use gdp for national deficit but every thing I see for fiscal deficit has gdp. So I guess one is measure of nations economy versus the government budget. A nation’s economy it makes since to use gdp because that is all the money moved by productions so to show the economy of a nation’s is able to produce more than it indebts itself is important https://fiscaldata.treasury.gov/americas-finance-guide/national-deficit/
It’s not the deficit, no. As you correctly stated, the definition of deficit doesn’t involve GDP. You could measure deficit as a proportion of GDP to compare deficits across differently-sized economies, but that’d be a different statistic. For example, imagine:
Australia has: GDP $1,000; government revenue $500; government expediture $600
New Zealand has: GDP $500; government revenue $200; government expediture $300
Both have a deficit of $100 per year. If they have been running the $100 per year deficit for ten years, both have $1000 in debt. For Australia that’s a 200% debt -to-revenue ratio, but for NZ it’s 500%.