Deficit Agent

A deficit agent is an economic agent that consumes an amount greater than its income. That is, their expenses exceed their money inflows, producing a deficit . This forces you to seek third party financing.

In other words, a deficit agent is one who spends more than he earns. That way, he is unable to save a surplus and needs to ask for credit.

It should be noted that the economic agents or economic units are those individuals or institutions that conduct business or activities related to them. In addition, they can belong to the public or private sector, being families, companies and state entities.

As a consequence of their decisions, economic agents can acquire the role of deficits. For example, if the government spends more than it collects taxes.

The main characteristic of a deficit agent is that I could not fulfill its obligations. That is, you cannot pay your creditors, which includes employees, in the case of a company.

Often, deficit agents seek financing in the markets to meet their commitments. As a counterpart, surplus agents offer credit in exchange for future returns. In this way, there is a complementarity.

Countries as deficit agents

Deficit agents can also be countries or governments. Here, we explain three situations in which this happens:

  • Fiscal or public deficit:A state administration can have a public deficit when it collects less than it needs. Then, it becomes a deficient agent.
  • Commercial deficit:Refers to the deficit that a territory obtains for the transactions of goods and services abroad. The deficit agent will then be the country that exports to a lesser extent than what matters. This is reflected in the trade balance .
  • External deficit: In this case, the deficit agent would be a country, when the inflows of money from abroad are less than the exits or payments abroad. This is not only a result of exports and imports (trade balance), but also of capital movements, for example, through remittance transfers

Leave a Comment