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Government Debt, Deficits, and Economic Growth: Lessons from Fiscal Arithmetic

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Abstract

Economic policy debate in the United States and other developed economies has been dominated by talk of lowering fiscal deficits through spending reductions. Many argue that severe austerity is needed to reestablish fiscal sustainability, economic stability, and growth. The authors however, show that fiscal restraint is not conducive to economic growth out of the recession. The authors argue that spending is needed to spur growth and lower the deficit.

Suggested Citation

  • Laura de Carvalho & Christian Proano & Lance Taylor, 2010. "Government Debt, Deficits, and Economic Growth: Lessons from Fiscal Arithmetic," SCEPA policy note series. 2010-02, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    • Handle: RePEc:epa:cepapn:2010_02
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    References listed on IDEAS

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    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.
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    Cited by:

    1. Thomas R. Michl, 2013. "Public debt, growth, and distribution," Review of Keynesian Economics, Edward Elgar Publishing, vol. 1(1), pages 120-144, January.

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    More about this item

    Keywords

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    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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