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,...

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....

The United States faces two economic challenges: slow growth and an ever-increasing ratio of debt to GDP. Many policymakers believe they face a dilemma because the policy solutions to the two problems are opposite. To address the slow recovery, standard — Keynesian — economics suggests...

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...

The U.S. fiscal imbalance — the excess of what we expect to spend, including repayment of our debt, over what government expects to receive in revenue — is large and growing. And with politicians proposing large new expenditures, little is being done to rectify the country's fiscal health....

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...

The purpose of budget rules can be explored from the perspective of the expected results, obtained by their enforcement. On one hand, they are meant to improve or at least maintain certain levels of the budgetary deficit and public debt. On the other hand, they can help or limit the economic...

The U.S. is beset by weak economic growth, ballooning debt and stubbornly high unemployment but the collapse of the housing bubble that spurred the 2008-2009 global financial crisis was more a consequence than a cause of what is wrong. The real culprit was and remains poor policymaking in the...

The United States has a huge long-term fiscal gap, perhaps with a present value of around $74 trillion. By contrast, the explicit national debt of the U.S. is only around $6 trillion. The U.S. may thus be unable to continue meeting its current spending commitments without eventually enacting...