The U.S. Federal Debt Outlook: Reading the Tea Leaves
18 Pages Posted: 22 Mar 2010
Date Written: March 2010
Abstract
We show that fiscal policies reflecting a primary balance response to higher debt in line with historic experience would significantly increase the likelihood of reaching the debt targets of the U.S. administration in the medium term. Deficits and debt are higher under current budgetary proposals and IMF projections for real activity and interest rates, which do not include a reaction of policies to rising primary deficits. Under the IMF staff's current economic projections, a primary fiscal adjustment of about 3.5 percent of GDP would be needed to achieve a debt level of about 70 percent of GDP in 2020.
Keywords: Budgets, Business cycles, Debt management, Economic forecasting, Fiscal policy, Fiscal sustainability, Public debt, Sovereign debt, United States
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Costly Capital Reallocation and the Effects of Government Spending
-
What are the Effects of Fiscal Policy Shocks?
By Harald Uhlig and Andrew Mountford
-
What are the Effects of Fiscal Policy Shocks?
By Andrew Mountford and Harald Uhlig
-
What are the Effects of Fiscal Policy Shocks?
By Andrew Mountford and Harald Uhlig
-
Understanding the Effects of Government Spending on Consumption
By Jordi Galí, David Lopez-salido, ...
-
Understanding the Effects of Government Spending on Consumption
By Jordi Galí, David Lopez-salido, ...