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The Long-Run Effects of Federal Budget Deficits on National Saving and Private Domestic Investment: Working Paper 2014-02

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  • Jonathan Huntley

Abstract

The Congressional Budget Office's analyses of the long-term effects of changes in federal fiscal policy include the effects of changes in federal budget deficits on aggregate output and income. Those effects depend on the responses of private saving and net inflows of foreign capital to changes in deficits. This paper reviews empirical estimates of those two effects and explains how changes in private saving and net inflows of foreign capital can offset some of the effects of changes in deficits on national saving and private domestic investment. In its analyses, CBO

Suggested Citation

  • Jonathan Huntley, 2014. "The Long-Run Effects of Federal Budget Deficits on National Saving and Private Domestic Investment: Working Paper 2014-02," Working Papers 45140, Congressional Budget Office.
    • Handle: RePEc:cbo:wpaper:45140
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    File URL: https://www.cbo.gov/sites/default/files/113th-congress-2013-2014/workingpaper/45140-NSPDI_workingPaper_1.pdf
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    2. Germinal G. Van, 2022. "The Theory of Efficient Growth," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 65(2), pages 68-91.
    3. Edward Gamber & John Seliski, 2019. "The Effect of Government Debt on Interest Rates: Working Paper 2019-01," Working Papers 55018, Congressional Budget Office.
    4. Olanipekun Kasali, Nurudeen, 2019. "Fiscal Deficit And Investment In Nigeria," Ilorin Journal of Economic Policy, Department of Economics, University of Ilorin, vol. 6(6), pages 27-41, June.
    5. Robert J. Barro & Jason Furman, 2018. "Macroeconomic Effects of the 2017 Tax Reform," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 49(1 (Spring), pages 257-345.
    6. Moore, Rachel & Pecoraro, Brandon, 2019. "Modeling the Internal Revenue Code in a heterogeneous-agent framework: An application to TCJA," MPRA Paper 93110, University Library of Munich, Germany.
    7. Gale, William G., 2019. "Fiscal policy with high debt and low interest rates," MPRA Paper 99207, University Library of Munich, Germany.
    8. Nurudeen Olanipekun, Kasali, 2020. "The Effect of Fiscal Deficit on Investment in Nigeria," Working Papers 3, Department of Economics, University of Ilorin.
    9. Duy-Tung Bui, 2018. "Fiscal policy and national saving in emerging Asia: challenge or opportunity?," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 8(2), pages 305-322, August.
    10. Daniel Fried, 2023. "The U.S. Dollar as an International Currency and Its Economic Effects: Working Paper 2023-04," Working Papers 58764, Congressional Budget Office.

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