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Fiscal headwinds: Is the other shoe about to drop?

Author

Listed:
  • Brian Lucking
  • Daniel J. Wilson

Abstract

Federal fiscal policy during the recession was abnormally expansionary by historical standards. However, over the past 2 years it has become unusually contractionary as a result of several deficit reduction measures passed by Congress. During the next three years, we estimate that federal budgetary policy could restrain economic growth by as much as 1 percentage point annually beyond the normal fiscal drag that occurs during recoveries.

Suggested Citation

  • Brian Lucking & Daniel J. Wilson, 2013. "Fiscal headwinds: Is the other shoe about to drop?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue june3.
    • Handle: RePEc:fip:fedfel:y:2013:i:june3:n:2013-16
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    File URL: http://www.frbsf.org/economic-research/publications/economic-letter/2013/june/fiscal-headwinds-federal-budget-policy/
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    File URL: http://www.frbsf.org/publications/economics/letter/2013/el2013-16.pdf
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    Cited by:

    1. Jacob Berman & Leslie McGranahan, 2014. "Measuring Fiscal Impetus: The Great Recession in Historical Context," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q III.

    More about this item

    Keywords

    Fiscal policy - United States;

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