<Dl> <Dd> Total deficit t = r ⋅ D t − 1 + G t − T t (\ displaystyle (\ text (Total deficit)) _ (t) = r \ cdot D_ (t - 1) + G_ (t) - T_ (t) \,) </Dd> </Dl> <Dd> Total deficit t = r ⋅ D t − 1 + G t − T t (\ displaystyle (\ text (Total deficit)) _ (t) = r \ cdot D_ (t - 1) + G_ (t) - T_ (t) \,) </Dd> <P> where the first term on the right side is interest payments on the outstanding debt . </P> <P> Finally, this year's debt can be calculated from last year's debt and this year's total deficit, using the government budget constraint: </P>

The government budget deficit must be equal to the surplus