Is the increase in national debt for the year subtracted from GDP?

Question:

Is the yearly increment to national debt (yearly budget surplus or deficit) included in the calculation of Gross Domestic Product? Specifically, for recent years, is the increase in national debt for the year subtracted from GDP?

Answer:

No, the increase in national debt is not subtracted from GDP. (Debt, per se, is not productive.) But interest payments on outstanding debt enter GDP as government expenses, as G in Y = C+I+G. 

Last updated on
October 1, 2024

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