The Marginal Cost of Funds from Public Sector Borrowing

  • Bev Dahlby
  • Published 2004

Abstract

An expression for the welfare cost of a marginal increase in the public debt is derived using a simple AK endogenous growth model. This measure of the marginal cost of public funds (MCF) can be interpreted as the marginal benefit-cost ratio that a debtfinanced public project needs in order to generate a net social gain. The model predicts an increase in the… (More)

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Cite this paper

@inproceedings{Dahlby2004TheMC, title={The Marginal Cost of Funds from Public Sector Borrowing}, author={Bev Dahlby}, year={2004} }