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Joseph Stiglitz, Aaron Edlin, and J. Bradford DeLong

Print publication date: 2011

Print ISBN-13: 9780231143653

Published to Columbia Scholarship Online: November 2015

DOI: 10.7312/columbia/9780231143653.001.0001

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PRINTED FROM COLUMBIA SCHOLARSHIP ONLINE (www.columbia.universitypressscholarship.com). (c) Copyright University of Minnesota Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in CUPSO for personal use.date: 19 September 2021

Sense and Nonsense About Federal Deficits and Debt

Sense and Nonsense About Federal Deficits and Debt

(p.87) Chapter 11 Sense and Nonsense About Federal Deficits and Debt
The Economists' Voice

Michael J. Boskin

Columbia University Press

This chapter discusses how much federal government deficits matter in the short, medium, and long terms. Large federal government deficits can be appropriate in some circumstances—such as in a recession, or indeed in the case of a temporary spending need such as fighting a war—and have adverse effects on the economy in other cases. When the economy is strong, the budget should be in a surplus. Although it is impossible to be precise about the exact length of the short term—a period over which a deficit does not matter if it is cushioning the economy against the worst effects of a business cycle downturn—it is clear that large deficits year after year are a matter for concern. They imply an ever-growing tax burden on future generations of taxpayers. The chapter argues that we should not just look at the absolute size of the deficit itself. It provides a framework to ascertain more clearly whether we should or should not be worried about the size of the deficit.

Keywords:   fiscal policy, budget deficits, federal government, fiscal deficit, recession, temporary spending

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