The remaining carbon revenues could then finance deficit reduction or other policies.
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On top of that, Italy will have to borrow more to finance its deficit, the gap between tax revenues and spending.
To finance its deficit, however, the government has had to assume risks.
Nor do officials think there is any risk that the Bank of England will be taken to court for illegally helping the government to finance its deficit.
Currency intervention by Asian central banks helps to explain why America has so far been able to finance its deficit without higher American bond yields or a bigger fall in the dollar.
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Low rates stimulate the economy and are good news for the American government, which can finance its deficit cheaply and without facing the dilemmas that beset the Italian and Spanish governments, which must impose austerity at a time of economic slowdown.
It is based on the fact that the sum of the budget deficit, the capital inflow to finance the trade deficit, and the difference between domestic saving and domestic investment equals zero.
This reduces the net capital inflow required to finance the trade deficit.
The ending of the tax break in December has increased the need for inward investment by foreigners to finance the external deficit.
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In the Keynesian model, the money government borrows to finance the additional deficit spending magically appears in the form of cash in exchange for government bonds.
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Moreover, the beneficial impacts of Mr McCain's tax cuts on investment could be entirely cancelled out by the borrowing that would be needed to finance a bigger deficit.
The problem is not so much the budget deficit (though Greece was certainly profligate) as the net foreign borrowing by all actors, public and private (say to finance a trade deficit).
Bankruptcy is defined here and in my book as when the federal government can no longer borrow enough in the credit markets to finance its budget deficit, which is precisely what Greece has been suffering.
Indeed, at these rates it cannot afford to finance its own budget deficit nor the debt that needs rolling over in the near future.
Thanks to the dollar's stability, liquidity and low transaction costs, the U.S. has an edge in attracting capital inflows to finance the current account deficit.
It can easily finance the resulting fiscal deficit forecast at 3% of GDP this year because it built up a war chest of public savings when prices for copper, its main export, were high.
But the extra revenues will also help the finance ministry curb its burgeoning deficit.
This week France's own finance ministry suggested that its deficit might be in the 3.5-3.8% range.
Extra demand for the dollar as the world's main reserve currency has made it even easier for America to finance its current-account deficit.
Mr Trenchard also believes the States is right to expect increased profits in the finance industry to fill the deficit in the long term.
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That makes it a tempting target for deficit-cutting finance ministers.
Jaime Carrera of the Fiscal Policy Observatory, an NGO in Quito, reckons that the government will find it even harder to finance next year's deficit, which he forecasts at 2.5% of GDP.
Over the past few years, the dollar has been strong mainly because foreign investors have been happy to finance America's external deficit, thanks to rapid economic growth and high returns, especially in its equity market.
But the bravado is based partly on the hope that the oil price will rise next year, and the conviction that Venezuela's private banks will be happy to finance this year's deficit, albeit at a price.
If investors twig that European companies aren't such bad investments after all, he says, it will not be so easy for America to finance its current-account deficit with European savings and that points only one way for the dollar.
Such developments will make it harder for America to finance its huge current-account deficit.
Part of the reason is that capital inflows have gone mainly to finance its persistent current-account deficit.
These purchases of dollar assets have helped to prop up the greenback and finance America's vast trade deficit.
America, in turn, has been overly reliant on foreign capital inflows, so as to finance its record current-account deficit.
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