Most of the French and German capital deficit should be remediable through selling shares to investors or selling non-core assets, without recourse to taxpayers.
Just as during the Carter years, during the Bush years productive businesses suffered a capital deficit as money flowed into the dead money sector that is housing.
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It is based on the fact that the sum of the budget deficit, the capital inflow to finance the trade deficit, and the difference between domestic saving and domestic investment equals zero.
Further steps, though unlikely now, could involve excluding capital spending from deficit targets and allowing governments more time to meet the targets.
The necessary counterpart to an inflow of foreign capital is a deficit in the current account the largest component of which is trade in goods and services.
Clinton invested significant political capital in reducing the deficit, first by passing his 1993 economic package, which included tax increases.
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We then expand our framework to analyze what slowing cost growth would do for the deficit and capital formation (or investment).
The nature of the capital inflows financing a deficit also matters.
Also, the government should not be destroying what capital is created by deficit financing, which usually results in consumption at best, and, more often, total waste.
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The US also has a big deficit on its capital account, which has made it the world's largest debtor nation.
Likewise, as higher tax revenues on capital gains reduce the budget deficit, this helps to reduce bond yields and so drives up the stockmarket.
To obsess about one number such as the trade deficit and ignore capital inflows, personal incomes, corporate profits, the national balance sheet, etc. is almost pathological.
The current account deficit basically reflects capital imports and exports, or, to put it a slightly different way, the difference between domestic savings and domestic investment.
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Besides financing the trade deficit, these capital inflows have also supported the dollar which, between April 1995 and late 1998, strengthened by 50% against the yen.
The key to their argument was that the government's deficit rules allow capital spending to be increased without abandoning Plan A as the Treasury's so-called "fiscal mandate" targets current not capital spending.
India's high inflation and chunky current-account deficit, financed by capital flows, mark it out from most of Asia.
How would shifting to a 20% capital income tax rate affect the deficit?
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India also needs to keep rates high enough to attract foreign capital and offset the current account deficit, in order to keep the rupee from weakening and making inflation worse.
That has required us to make up the difference between our national investment and national saving by borrowing abroad in the form of the capital inflow that finances our trade deficit.
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Heavy government spending, whether through revenue collection or deficit financing means less capital for the companies that employ us, enhance our lives, and that we own as direct shareholders or through mutual funds and pension funds.
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Why invest so much political capital if it will not reduce the deficit?
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This reduces the net capital inflow required to finance the trade deficit.
Thanks to the dollar's stability, liquidity and low transaction costs, the U.S. has an edge in attracting capital inflows to finance the current account deficit.
India also needs to keep rates high enough to attract foreign capital and offset the current-account deficit, in order to keep the rupee from weakening and making inflation worse.
The government recently has simplified rules governing foreign investments in local bonds to attract capital flows and narrow its current-account deficit.
That capital inflow is a mirror image of the deficit in trade.
So too is the record amount of foreign capital flowing into the country and a trade deficit that's tripled in the last year.
In the case of the U.S., the trade deficit nearly always shows up as a capital surplus.
But of greater significance to America's deficit are signs that European exports of capital may be starting to ebb.
And, hobbled by a big budget deficit, that inevitably requires mobilising private capital.
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