Public debt/Addendum
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- ΔD = (D + F + Dr)/{Y(1 + r)} - D/Y
let 1/{Y(1 + g)} = A then:
- = A(D + F + Dr) - D/Y
- = A( D + F + Dr - D/AY)
- = A( D + F + Dr - D - Dg)
substituting for A:
- = {F + D(r - g)}/{Y(1 + g)}
or, approximately
- = {F + D(r - g)}/Y