Civic · 6 pages · 12 min
Why a deficit is a flow and a debt is a stock
A deficit is the gap over a period of time, while debt is the amount still owed at a given date.
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From the opening
A deficit is a flow, meaning that over a month or a year the spending being counted exceeds the revenue being counted for that same period. Debt is a stock, meaning that on a particular date it is the outstanding borrowing that has not yet been repaid. The opening covers a period gap is not a balance, borrowing turns the flow into stock, and reserves can cover a gap.
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Inside
- A period gap is not a balance
- Borrowing turns the flow into stock
- Reserves can cover a gap
- A smaller deficit can still add debt
- Where the idea stops applying
- A distinction worth keeping
Sources
- Budget deficit as a flow
- Outstanding public debt as a stock