The Traditional View (TV) of large deficits and debt is they have large economic costs, save in a recession and early recovery, because they crowd out investment and lower future income, and taken to extremes, can cause inflation and even a financial crisis. The TV has been challenged, most...

This paper introduces extensions of the National Income Accounts to include a consistent treatment of consumer durables and government capital in the measurement of consumption and income, and explicitly tests alternative propositions concerning the effects of government financial policy on real...