Fiscal Policy

Highlights It may seem self-evident that most governments are overly indebted, but both theory and evidence suggest otherwise. Higher debt today does not require higher taxes tomorrow if the growth rate of the economy exceeds the interest rate on government bonds. Not only is that currently the…

Congress is conducting a major economic experiment that has never been attempted in the U.S. outside of wartime; substantial fiscal stimulus when the economy is already at full employment. The budget deficit is on track to surpass 6% of GDP in a few years. It would likely peak above 8% in the…

Following the debacle of the failed attempt to repeal and replace Obamacare, the Trump Administration is focusing on another important part of its policy platform: reforming taxes and reshaping government spending. In theory, the legislative obstacles should be easier to overcome than with the…