Learning From the Reagan Deficits
This paper draws six observations from the U.S. fiscal policy actions of the 1980s and their apparent macroeconomic aftermath. in each case focusing on implications for familiar debates about economic behavior: (1) Across-the-board cuts in personal income tax rates reduced the government's tax revenues. (2) Reducing tax revenues did not restrain government spending, at least not by enough to avoid the emergence of historically large deficits. (3) Greater government deficits did not result in greater private saving. (4) Greater deficits did result in -- or at least coincide with -- higher real interest rates. (5) Greater deficits did result in reduced private investment (6) Greater deficits also resulted in lower net foreign investment.
|Date of creation:||Mar 1992|
|Publication status:||published as The American Economic Review, Vol. 82, No. 2, pp. 299-304, (May 1992).|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ashenfelter, Orley & Heckman, James J, 1974.
"The Estimation of Income and Substitution Effects in a Model of Family Labor Supply,"
Econometric Society, vol. 42(1), pages 73-85, January.
- Orley Ashenfelter & James Heckman, 1971. "The Estimation of Income and Substitution Effects in a Model of Family Labor Supply," Working Papers 402, Princeton University, Department of Economics, Industrial Relations Section..
- Benjamin M. Friedman, 1978. "Crowding Out or Crowding In? Economic Consequences of Financing Government Deficits," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 9(3), pages 593-641.
- B. Douglas Bernheim, 1987.
"Ricardian Equivalence: An Evaluation of Theory and Evidence,"
NBER Chapters,in: NBER Macroeconomics Annual 1987, Volume 2, pages 263-316
National Bureau of Economic Research, Inc.
- B. Douglas Bernheim, 1987. "Ricardian Equivalence: An Evaluation of Theory and Evidence," NBER Working Papers 2330, National Bureau of Economic Research, Inc.
- Lawrence Summers & Chris Carroll, 1987. "Why Is U.S. National Saving So Low?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(2), pages 607-642.
- Eisner, Robert & Pieper, Paul J, 1986. "A New View of the Federal Debt and Budget Deficits: Reply," American Economic Review, American Economic Association, vol. 76(5), pages 1156-1157, December.