It has been recognized that conversion of an income tax to a consumption tax can increase aggregate saving even if each household maintains a constant propensity to save. The reason is heterogeneity: the variation in the propensity to save among households. How much of an increase in saving is...

The new Federal Reserve chairman, Ben Bernanke, has inherited a hot seat. This economist analyzes four of his key speeches in recent years to try to explain his theoretical view of fiscal and monetary policy. Bernanke's writings are far more lucid than Alan Greenspan's. Seidman concludes that...

Fiscal stimulus has long been de-emphasized as a policy tool in the United States. This economist takes a longneeded look at the most prominent research in the field, reviews it for Challenge , and concludes that it is time to think about fiscal stimulus again.

Is a tax rebate safe and effective? Simulations with an empirically-tested macro-econometric model are used to estimate the impact of the actual 2001 tax rebate in the U.S. and of a rebate twice as large repeated in three additional quarters, and the results of the simulations are interpreted in...

Two recent empirical studies of the 2001 recession published in the American Economic Review imply that an old-fashioned Keynesian fiscal stimulus—a cash transfer (“tax rebate”) or tax cut to households-- can overcome the zero interest-rate bound problem. We provide a quantitative estimate...

This paper provides a quantitative assessment of the use of fiscal stimulus to achieve full recovery from a severe recession when the potency of monetary policy weakens after hitting its zero interest-rate bound. By contrast, most of the numerous recent zero interest-rate bound papers have...

This article recommends a tax reform strategy that can accomplish three objectives: raise sufficient revenue to deal with long-run budget challenges, promote long-run economic growth, and provide progressivity in the face of increasing inequality. The strategy for overcoming this fiscal trilemma...

This article makes an economist's case for extending Medicare to cover all Americans. First, Medicare for All would achieve universal coverage and portability. Second, Medicare for All would eliminate health insurance distraction for business managers, entrepreneurs, and job seekers, thereby...