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- Title
U.S. Deficits Since World War I.
- Authors
Barro, Robert J.
- Abstract
The tax-smoothing theory suggests that deficits would respond particularly to recession, temporarily high government spending, and anticipated inflation. My empirical estimates indicate that a relation of this type is reasonably stable in the U.S. since at least 1916. In particular, the statistical evidence does not support the idea that there has been a shift toward a fiscal policy that generates either more real public debt on average or that generates larger deficits in response to recessions. Further, the deficits for 1982-3 and popular projections (formed in 1984) for 1984-5 are consistent with the previous structure. The high values of these deficits reflect the customary response to substantial recession (interacting with big government) and to expected inflation.
- Subjects
BUDGET deficits; GOVERNMENT spending policy; PRICE inflation
- Publication
Scandinavian Journal of Economics, 1986, Vol 88, Issue 1, p195
- ISSN
0347-0520
- Publication type
Article
- DOI
10.2307/3440285