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  1. Diganta said, on April 11, 2012 at 5:45 am

    As per my understanding, deficit has no issues … however, the internal deficit might be (given Greece’s precedence).

    • jrahman said, on April 11, 2012 at 9:43 am

      In the mercantilist model, debts and deficits were bad things. The classical model said debts and deficits don’t really matter because the economy eventually returns to equilibrium. Modern view is that deficits and debts matter under certain circumstances. Relevant for Bangladesh is the risk of there being a view that the government isn’t in a position to pay its debts. Another way of saying it is, deficits matter if people think they matter. And looking at the data, I’m not sure that people should get too alarmed.

      But then again, people are fickle, and can panic easily…

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