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Science 24 April 1987:
Vol. 236. no. 4800, pp. 397 - 403
DOI: 10.1126/science.236.4800.397
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Articles

New Directions in the Relation Between Public and Private Debt

BENJAMIN M. FRIEDMAN 1

1 Professor of economics at Harvard University.

Until the 1980s the outstanding indebtedness of government and private-sector borrowers in the United States exhibited sufficient negative covariation that total outstanding debt remained steady relative to nonfinancial economic activity. Three hypotheses—one based on lenders' behavior, one on borrowers' behavior, and one on credit market institutional arrangements—provide potential explanations for this phenomenon. Since 1980 the U.S. debt markets have departed from these previously prevailing patterns, however, as both government and private borrowing have risen sharply.

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Science. ISSN 0036-8075 (print), 1095-9203 (online)