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Setting a Debt Target for the U.S.

Introduction The first step in a rules based approach to fiscal policy is setting a target for debt. In this literature economists provide evidence for both positive and negative impacts of debt on economic activity. This evidence is used in

Fiscal Space and Fiscal Rules Revised: What Have We Learned?

John Merrifield and Barry Poulson The Great Recession and slower economic growth in recent years have been accompanied by a discontinuous increased in debt/GDP ratios in most OECD countries, most notably the U.S. This debt burden has raised questions regarding

Fiscal Imbalance and the Fiscal Gap

As individuals we know that we cannot run a Ponzi scheme indefinitely. We might be able to roll over an old loan and replace it with a new loan for some period of time, but eventually creditors will demand repayment

Debt and Stabilization Policy

Introduction Perhaps the most frequent objection to a rules based approach to fiscal policy is the potential constraint this imposes on the discretion of the government to pursue macro-economic stabilization policy. The debate between rules versus discretion in macro-economic policy

Debt and Economic Growth

The Non-linear Relationship between Debt and Economic Growth Rinehart and Rogoff (2009a, 2009b, 2010) launched an ongoing debate regarding the relationship between debt and economic growth. Their empirical evidence for a large sample of countries revealed that public debt in

Curing Debt Overhang Eight Years after the Financial Crisis

John Merrifield and Barry Poulson The U.S. responded to the financial crisis with an aggressive Keynesian fiscal stimulus, and emerged as one of the most indebted nations in the world, gross debt now exceeds Gross Domestic Product (GDP). The Congressional

A Topical Bibliography on the U.S. Debt Crisis

Setting the Parameters for U.S. Fiscal Stabilization Policy What is the Rationale for New Fiscal Rules? Alesina and F. Giavazzi (eds.), Fiscal Policy after the Financial Crisis, NBER, The University of Chicago Press, Chicago. Persson, T., and G. Tabellini. 2000.

Summary: A New Grand Bargain on Land Policy

Balancing the federal budget and reducing debt is a formidable task, to say the least. The debt/GDP ratio is now at the highest level in the nation’s history, and it is projected to rise even higher. In our study, we

Resolving The Conflict Over Federal Land Policy

Throughout American History federal land policies have been contentious. Federal Land ownership began with the cession to the federal government of western lands claimed by the original colonies. The state’s cession of land was crucial in enabling the federal government

Privatizing Public Lands

Over the first century of our history the privatization of public lands was designed to promote western settlement. Public land policies also generated much need revenue to pay down the national debt, as well as finance current expenditures. Because the

Preserving Our Land Heritage the National Monuments

Preserving Our Land Heritage: National Parks, National Monuments, and Wilderness Areas By the late 1800s there was growing concern that the rapid growth of the West threatened some of the most unique parts of our land heritage, valued for their

Fiscal Autonomy for state governments and Public Land Policy

A new ‘Grand Bargain’ would privatize public lands, and transfer some public lands from the federal government to the states. These public land policies would have a significant impact on federal and state finances. Privatization of federal land could generate

Barry on Land Policy

As you would expect RFF has done the definitive work on mineral and other resources in the U.S. The Sutherland Institute in Utah has done some interesting research on the transfer of federal lands to the state. They commissioned a

A Federal ‘Grand Bargain’

Bibliography: a ‘Grand Bargain’ for Public Land Policy Anderson, T., V. Smith, and E. Simmons. 1999. How and Why to Privatize Federal Lands, Policy Analysis no. 9, The CATO Institute. Carlton, J. 2017. Zinke Plans to Boost Payout to the

What is the Optimum Combination of Fiscal Rules?

“The debt trajectory is the core concern of the fiscal framework. Given the uncertainties surrounding the macroeconomic determinants of debt developments and also that these macroeconomic variables are beyond the control of the government, though they are endogenously affected by

The Merrifield Poulson (MP) Rules

The United States faces a considerable challenge to achieve fiscal consolidation. With debt in excess of $20 trillion, and a debt/GDP ratio in excess of 100%, the U.S. has emerged as one of the major debtor countries in the OECD.

Summary: An Alternative Fiscal Path

If the federal government had not abandoned the unwritten fiscal constitution of balanced budgets the debt could have been reduced, and perhaps eliminated over the past half century. Unfortunately the government has pursued Keynesian fiscal policies that are biased toward

Our survey of fiscal rules in OECD countries suggests that the most successful of these rules is the Swiss debt brake

The Swiss debt brake has enabled Switzerland to pursue a policy of fiscal consolidation to reduce deficits and achieve a sustainable fiscal policy. The Swiss debt brake imposes an expenditure limit that is cyclically adjusted based on the relationship between

How Should Fiscal Rules be designed to Achieve Debt Targets?

What is the Optimum Combination of Fiscal Rules? Bovet, J. J. Fournier, and A. Mourougane. 2016. “A Reassessment of Fiscal Space in OECD Countries’, OECD Working Paper no. 1352, Nov 23. Carnot, N. (2014), “Evaluating Fiscal Policy: A Rule of