To: gpowell who wrote (19 ) 12/17/2005 5:20:25 PM From: gpowell Respond to A word on government expenditure. If the net present value of a stream of future benefits is larger than the net present value of the debt service (assuming the debt is never paid down) then that expenditure will result, obviously, in a Pareto improvement. Thus, the presence of debt and/or the creation of debt is not, per se, a bad thing. Although let’s note that simply because the stream of benefits are greater doesn’t imply that the opportunity cost of the expenditure isn’t higher than the benefits, i.e. if one choice of expenditure prevents another, higher benefit alternative from being chosen, then even though the expenditure is still Pareto improving, it is not Pareto maximizing.en.wikipedia.org
