Fiscal adjustment becomes like walking up the down escalator when growth-promoting spending is cut so much as to lower growth and thus the present value of future tax revenues to a degree that more than offsets the improvement in the cash deficit. Although short-term cash flows matter, a...

The problem of climate change seems to be a tragedy of the commons: despite the global benefits of reducing green-house gas emissions, no individual has any incentive to reduce his or her own emissions. Yet many people are making efforts to reduce emissions and putting pressure on businesses and...