Public Finance: Government Budgets, Deficits & Debt Sustainability

What you'll build

What you will be able to do

Each lab ends with a concrete result that you build yourself and the checker confirms, cell by cell.

• Express Valdoria's revenue and spending lines as % of GDP, find each spending function's share of the total, calculate the tax ratio and chart spending from the largest to the smallest item.
• Split Valdoria's budget balance into the overall and the primary balance for five years, scale the primary balance by GDP and measure how much of the revenue goes on interest.
• Project Valdoria's debt ratio for ten years with the debt-dynamics equation, split each year's change into the snowball effect and the primary balance and chart the debt path.
• Calculate, for five Valdoria scenarios, the primary balance that keeps the debt ratio constant, compare it with the plan, label the outcome and project next year's debt ratio.
• Complete Valdoria's bracket table, calculate the income tax of six taxpayers with an approximate VLOOKUP, and compare each taxpayer's marginal rate with the average rate actually paid.
• Measure how strongly Valdoria's tax revenue responds to GDP growth, strip out the effect of new tax measures to get the elasticity, and forecast revenue for three years.
• Appraise Valdoria's regional rail upgrade: net social benefit by year, social NPV at the official discount rate, the benefit-cost ratio and a test at a higher rate.
• Compare Valdoria's 2026 spending outturn with the budget line by line, flag variances beyond tolerance, compute the deficit as % of GDP and test it against the deficit rule.