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Abstract Federal debt is on an unsustainable path. Low interest rates mean that we do not need to reduce budget deficits immediately and that we should do more public investment. [...]

Abstract I am quite concerned about the high and rising levels of federal debt we will have in the long term unless our policies are changed. But as I look [...]

Federal budget policy should focus on raising incomes for lower- and middle-income people, because they have benefited little from economic growth in the past few decades. That goal would be [...]

Although weakness in the U.S. economy is an important factor in current federal budget deficits, even robust growth will leave unsustainable deficits unless there are major changes in federal policies. [...]

Four observations on the current and future federal budget are presented and discussed. These are (I) resumption of healthy economic growth will not he enough to close the gap between [...]

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jmoneco.2005.10.012 Byline: Karen E. Dynan, Douglas W. Elmendorf, Daniel E. Sichel Keywords: Economic fluctuations; Volatility; Financial innovation; Financial deregulation Abstract: The stabilization of economic activity in the mid 1980s has received considerable attention. Research has focused primarily on the role played by milder economic shocks, improved inventory management, and better monetary policy. This paper explores another potential explanation: financial innovation. Examples of such innovation include developments in lending practices and loan markets that have enhanced the ability of households and firms to borrow and changes in government policy such as the demise of Regulation Q. We employ a variety of simple empirical techniques to identify links between the observed moderation in economic activity and the influence of financial innovation on consumer spending, housing investment, and business fixed investment. Our results suggest that financial innovation should be added to the list of likely contributors to the mid-1980s stabilization. Author Affiliation: Division of Research and Statistics, Federal Reserve Board, Washington, DC 20551, USA Article History: Received 4 October 2005; Accepted 27 October 2005 Article Note: (footnote) [star] This paper was prepared for the April 2005 Carnegie-Rochester Conference on Public Policy, 'Financial Innovation, Risk, and Fragility.' We thank Darrel Cohen, Wendy Edelberg, William English, Joshua Gallin, Marvin Goodfriend, Stephen Oliner, Michael Palumbo, John Roberts, Jessica Wachter, David Wilcox, and conference participants for helpful comments, and Blake Bailey, Thomas Bridges, and Adam McGlashan for research assistance. An appendix available from the authors includes tables and figures not included in the published version of the paper as well as a brief review of the evidence regarding the leading hypotheses for the moderation in economic activity. The views expressed in the paper are our own and not necessarily those of the Federal Reserve Board or other members of its staff.

The support given by the people of Massachusetts to the Proposition 2 1/2, a ballot initiative that dramatically reduced local property taxes, can be attributed to a perception among the people regarding agency losses that will result from the difficulty of monitoring government. The support given by the people can also be attributed to a belief that the government is inefficient because the people have high tax burden. Three theories of voter sentiment, namely the agency loss theory, the regret theory and the personal finance theory, were proven based from the patterns of votes support.

Potential fiscal responses to an aging population in the United States are evaluated. Factors which influence both consumption and national saving are discussed and future economic management modes suggested.

The article discusses the features that imparted to the success of the publication. According to the author, the publication has focused at the intersection of research and policymaking, encouraging economists to apply the profession's best knowledge to important policy issues. Editors George Perry and Bill Brainard has also contributed much to its success by recruiting authors, offering counsel on their research and chosing incisive panel members. Their skills and dedicated stewardship has enable the publication to play a central role in the economics profession and to have tremendous influence on the conduct of economic policy.