How Big is the Debt? The debt at a given time is the sum of all past budget deficits Cumulative excess of past spending over past receipts When there is a deficit, debt goes up; when there is a surplus, debt goes down Debt is stock variable while deficit and surplus are flow variables8 How Big is the Debt? • The debt at a given time is the sum of all past budget deficits. – Cumulative excess of past spending over past receipts. – When there is a deficit, debt goes up; when there is a surplus, debt goes down. – Debt is stock variable, while deficit and surplus are flow variables