This would mean a rise in the price of raising capital internationally, both for the government and the private sector. •  The fourth derives from the connection between a rise in the budget deficit and a rise in the balance-of-payments deficit.
This was very clearly illustrated in the mid-1990s when due to expansionary fiscal and monetary policies the balance-of-payments deficit grew to a potentially critical level. As a result we had to adopt contractionary policies. A repeat of the first act in that performance is unfolding before our eyes now in 2001, with a rising budget deficit contributing to a rise in the balance-of-payments deficit.