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Nonlinearities in the Effects of Debt and Fiscal Policy: Evidence from the States

Author

Listed:
  • Jo Anna Gray

    (University of Oregon, Eugene, USA)

  • Joe A. Stone

    (University of Oregon, Eugene, USA)

Abstract

Evidence from a half century of experience by U.S. states identifies nonlinearities in the effects of debt and fiscal policy on growth. Effects are Keynesian for low to moderate levels of debt and stimulus but anti Keynesian for sufficiently high levels of debt or stimulus. Results are broadly consistent with those found in the cross-country studies of Adam and Bevan (2005) and Reinhart and Rogoff (2010).

Suggested Citation

  • Jo Anna Gray & Joe A. Stone, 2012. "Nonlinearities in the Effects of Debt and Fiscal Policy: Evidence from the States," Economic Research Guardian, Mutascu Publishing, vol. 2(2), pages 152-159, December.
    • Handle: RePEc:wei:journl:v:2:y:2012:i:2:p:152-159
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    References listed on IDEAS

    as
    1. Carmen M. Reinhart & Kenneth S. Rogoff, 2010. "Growth in a Time of Debt," American Economic Review, American Economic Association, vol. 100(2), pages 573-578, May.
    2. Mofidi, Alaeddin & Stone, Joe A, 1990. "Do State and Local Taxes Affect Economic Growth?," The Review of Economics and Statistics, MIT Press, vol. 72(4), pages 686-691, November.
    3. Gray, Jo Anna & Stone, Joe A., 2012. "Debt and nonlinear fiscal policy: evidence from the states," MPRA Paper 39731, University Library of Munich, Germany.
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    Cited by:

    1. Shafi, Maryam & Asghar, Zahid, 2015. "Tax Policy and Economic Growth: A Semi-Parametric Approach Using AMT," MPRA Paper 66662, University Library of Munich, Germany.
    2. Goldberg, Andrew & Romalis, John, 2015. "Public Debt and Growth in U.S. States," Working Papers 2015-10, University of Sydney, School of Economics.

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    JEL classification:

    • A00 - General Economics and Teaching - - General - - - General
    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • H00 - Public Economics - - General - - - General

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