Ambaw, D.Knudsen, D.2019-03-142019-03-142015http://hdl.handle.net/2440/118169Working paper 28.1.15We attempt to clarify the formation of interest income and examine the role of a fiscal reaction function in ADAM in keeping the public debt from exploding when there is 1% increase in the public purchase of goods and services and the VAT rate. The paper briefly demonstrates the effectiveness of the proposed fiscal rule in stabilizing the public budget.enYou are free to re-use and reproduce contents from dst.dk and statbank.dk. This includes even commercial use. You should, however, always include a source accreditation to Statistics Denmark.Fiscal reaction function; public budget; forward looking expectationWorking paper0030110553239461