In recent contributions, Weizs cker (2014) and Summers (2014) maintain that mature economies accumulate too much capital. They suggest large and lasting public deficits as a remedy. This paper argues that overaccumulation cannot occur in an economy with land. It presents novel data of aggregate...

This paper explores a natural connection between fiscal multipliers and foreign holdings of public debt. Although fiscal expansions can raise domestic economic activity through various channels, they can also have crowding-out effects if the resources used to acquire public debt reduce domestic...

This paper applies the probabilistic debt sustainability model developed for the euro area in Cline (2012, 2014) to sovereign debt in the United States and Japan. The results indicate that to avoid further increases in the expected ratio of public debt to GDP over the next decade, average annual...

This article explores the challenges posed by the rising US national debt and government budget deficits. Using a combination of literature review and statistical analysis, the article examines the factors contributing to the national debt and the potential consequences of unsustainable...

The financial crisis and the ensuing Great Recession created unprecedented federal budget deficits in recent years. In fact, these events, combined with subsequent slow growth and two continuing unfunded wars, have resulted in a national debt that is out of control by all meaningful measures....

We develop a debt-to-GDP forecasting framework incorporating the classical debt accounting relationship relating the debt-to-GDP ratio to its previous period value, the growth rate of the economy, the government cost of debt service, and the primary balance. We present a linearization of the...

US federal debt held by the public rose from 35 percent of GDP in 2007 to 72 percent in 2015, reflecting the Great Recession as well as rising health and social spending, and then to 79 percent in 2019 following the 2017 tax cuts. In 2020-21 federal assistance to address the COVID-19 shock will...

Recent research and events have brought fiscal policy back into the spotlight. Fiscal Taylor rules and error correction models have represented two different ways of quantifying the feedbacks from fiscal and economic conditions to fiscal policy decisions. This paper synthesizes these two ideas,...

Recent research and events have brought fiscal policy back into the spotlight. Fiscal Taylor rules and error correction models have represented two different ways of quantifying the feedbacks from fiscal and economic conditions to fiscal policy decisions. This paper synthesizes these two ideas,...

In the context of the increasing budget deficit and public debt, on one hand, and the need to restore economic growth without compromising financial stability and fiscal sustainability on long term, on the other hand, governments must undertake severe measures concentrated especially on...