The “burden of the debt” still appears to be a matter of concern to the United States public, economic teaching notwithstanding. In the debates preceding the 1964 tax cut, such matters as the existing budgetary deficit and the swelling public debt evoked as much passion as confusion. In this paper we intend to focus on one question: will a tax cut designed to generate a full employment equilibrium necessarily increase the debt burden, as defined by Domar. In particular, we are interested in the impact of a tax reduction on the debt burden, given that a budgetary deficit exists; and under the condition that the monetary authorities have decided to tighten credit conditions. We shall assume throughout that interest rates are determined by the monetary authorities, and that their policy is dictated by balance of payments rather than aggregate demand considerations. it will also be assumed that the tax reduction takes into account any planned increase in the rate of interest. Finally, we assume that budgetary deficits are financed by borrowing from the nonbank public and not by new money.

Households and firms are now holding unprecedented amounts of highly shiftable, “liquid,” assets. Even the holding of currency has risen to a level requiring a formal Federal Reserve explanation. In the aggregate, such holdings have a potential to disturb consumer and inventory markets if economic units attempt substantial shifts between assets of one degree of liquidity to another, or a shift from liquid assets, money or near-money, to goods in the stores and materials in the warehouses.

Effects of Multicollinearity and Autocorrelation on Estimates of Parameters by W. Schink and J. Chiu appeared in the June 1966 issue of this Journal.

Today great emphasis is being placed upon the need to maintain adequate supplies of money in the economy in the face of continuing balance of payments deficits. This emphasis reflects a desire to assure a. continuous high level of economic activity and low unemployment rates.

This paper examines the quantitative aspects of the small business investment company program. The total amount of investments made by SBICs is compared with the amounts of capital and loan funds which have been put into the SBIC program. Next, an attempt is made to determine the total direct dollar costs of administrating the program and the indirect costs associated with making SBIC investments. While the paper does not examine in detail all the qualitative aspects of SBIC investments, it does examine those qualitative features which affect the quantity of “legitimate” SBIC investments.