Restoring Sustainable Macroeconomic Policies in the United States

Barry W. Poulson; John Merrifield

doi:10.5771/9781666916614

Summary

Slowing economic growth and debt fatigue continue to hamper fiscal policy in the United States. The question is whether there is an alternative path to the one projected in CBO long term forecasts, and if so, how citizens can choose this alternative path. The experiences of Germany, Sweden, and Switzerland reveal that an alternative path of sustainable debt is possible, and that citizens in a democratic society are capable of choosing that path. This book explores the potential impact of Swiss-style fiscal rules on the U.S. budget and the economy over the next three decades. The dynamic simulation analysis reveals that with these fiscal rules in place, it is possible for the U.S. to stabilize and reduce debt to sustainable levels over the forecast period. The government must preserve policy credibility by demonstrating a commitment to meet the challenges of economic shocks. The recent economic crises have provided a learning experience, and the rules-based macroeconomic framework required for this new era may differ significantly from that of the past. With new fiscal rules in place, the U.S. can restore long term economic growth. However, empirical analysis reveals how difficult this challenge will be, and why the U.S. is likely to continue to experience debt fatigue.

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Bibliographic data

Copyright year: 2022
ISBN-Print: 978-1-6669-1660-7
ISBN-Online: 978-1-6669-1661-4
Publisher: Lexington, Lanham
Language: English
Pages: 188
Product type: Book Titles

1. Contents No access
2. 1. Figures No access
  2. Tables No access
3. 1. Restoring Sustainable Macroeconomic Policies in the United States No access
4. Acknowledgments No access
1. Note No access
1. The “Old Time Fiscal Religion” No access
2. The Nation’s First Debt Crisis No access
3. Abandoning the Old Time Fiscal Religion No access
4. The Current Debt Crisis, Does Debt Matter? No access
5. America Should Not Abandon Jeffersonian Debt Principles No access
6. Note No access
7. References No access
1. Debt Fatigue No access
2. It’s the Spending, Stupid No access
3. Debt Fatigue and Risk of Default No access
4. Debt Solvency and Sustainability No access
5. Sustainable Debt Trajectories in Germany, Sweden, and Switzerland No access
6. The Challenge of Debt Fatigue in the United States No access
7. Notes No access
8. References No access
1. Explaining Debt Fatigue No access
2. The Failure of Monetary Policy No access
3. Abandoning Monetary Rules No access
4. The Failure of Fiscal Policy No access
5. Abandoning Fiscal Rules No access
6. Notes No access
7. References No access
1. Debt Fatigue, an International Phenomenon No access
2. Zombie Enterprises, a Symptom of Debt Fatigue No access
3. Zombification in Japan No access
4. Zombification Comes to the United States No access
5. How the Failure to Normalize Monetary Policy Creates Zombie Enterprises No access
6. How the Failure to Normalize Fiscal Policy Creates Zombie Enterprises? No access
7. An Alternative Path No access
8. References No access
1. Introduction No access
2. Challenging Rules-Based Fiscal Policy and the Great Moderation in Macroeconomic Policy No access
3. New Frontiers in Rules-Based Fiscal Policy No access
4. A Path Forward No access
5. Notes No access
6. References No access
1. Introduction No access
2. A Consensus Supporting a Great Moderation in Macroeconomic Policy No access
3. Is the Consensus Supporting a Great Moderation in Macroeconomic Policy Disappearing? No access
4. Designing New Fiscal Rules No access
5. Dynamic Simulation Analysis of Fiscal Rules in Alternative Proposals No access
6. Conclusion No access
7. Notes No access
8. References No access
1. The Merrifield/Poulson (MP) Fiscal Rules No access
2. Dynamic Simulation Analysis of the MP Rules No access
3. Alternative Scenario Analysis No access
4. Conclusion No access
5. Notes No access
6. References No access
1. Introduction No access
2. What Have We Learned from Second-Generation Fiscal Rules? No access
3. Reforming the Budget Process No access
4. Independent Monetary Institutions No access
5. A Balanced Budget Amendment Revisited No access
6. Growing Dynamic Credence Capital by Restoring a Great Moderation in Macroeconomic Policy No access
7. Swords to Ploughshares No access
8. Notes No access
9. References No access
1. MP Rules Equations No access
1. Model Legislation for an Advisory Fiscal Council (AFC) No access
2. Discussion No access
1. Model Legislation for a Balanced Budget Amendment and Expenditures Limitation Act No access
2. Balanced Budget Amendment No access
3. Discussion No access
4. Note No access
Index No access Pages 183 - 186
About the Authors No access Pages 187 - 188