National Debt Reduction vs
NATIONAL DEBT MODEL
Stock-flow consistent model with private debt provided by the financial sector. No government sector. Economic activity is funded by private bank money only. Business sector pays an exogenous amount in wages which is funded by internal finance if available, while the remainder is financed by credit (i.e. external finance). Business equity is the difference of the current account and business debt. Firms are passive in this model--they do not save and pass all revenue to households minus repayments on debt--which is also an exogenous variable in the model.