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Public Debt Dynamics: The Effects of Austerity, Inflation, and Growth Shocks (PDF Download)
- Publication Year :
- 2012
-
Abstract
- The author studies how macroeconomic shocks affect U.S. public debt dynamics using a VAR with debt feedback. Following a fiscal austerity shock, the debt ratio initially declines and then returns to its pre-shock path. Yet, the effect is not statistically significant. In a weak economic environment, the likelihood of a self-defeating austerity shock is much higher than in normal times. An inflation shock only slightly reduces the debt ratio for a few quarters. A positive growth shock unambiguously lowers debt. In our specification, the debt ratio is stationary, whereas a VAR excluding debt may imply an explosive debt path.
Details
- Language :
- English
- ISBNs :
- 9781475510553 and 9781475541274
- Volume :
- 00012
- Database :
- eBook Index
- Journal :
- Public Debt Dynamics: The Effects of Austerity, Inflation, and Growth Shocks (PDF Download)
- Publication Type :
- eBook
- Accession number :
- 568181