Restoring Sustainable Macroeconomic Policies in the United States

Slowing economic growth and debt fatigue hinder fiscal policy in the US. Germany, Sweden, and Switzerland demonstrate that sustainable debt is possible through democratic choices. This book explores the potential impact of Swiss-style fiscal rules on the US budget and economy over the next three decades, suggesting they can stabilize and reduce debt to sustainable levels. However, empirical analysis shows the challenge of this task and the likely persistence of debt fatigue.

Format: Hardback
Length: 202 pages
Publication date: 08 August 2022
Publisher: Lexington Books

The United States faces ongoing challenges in its fiscal policy due to sluggish economic growth and mounting debt. The central question revolves around whether there exists an alternative route to the path projected by the Congressional Budget Office (CBO) in its long-term forecasts. This book delves into the potential impact of implementing Swiss-style fiscal rules on the U.S. budget and economy over the next three decades. Through a dynamic simulation analysis, it is demonstrated that these fiscal rules have the potential to stabilize and reduce debt to sustainable levels within the forecast period. However, the government must maintain its policy credibility by demonstrating a steadfast commitment to addressing economic shocks. The recent economic crises have offered valuable lessons, and the framework required for this new era of fiscal policy may differ significantly from past approaches. While the implementation of new fiscal rules holds the promise of restoring long-term economic growth, empirical analysis highlights the inherent difficulties and why the United States is likely to persist in facing debt fatigue.

The United States faces ongoing challenges in its fiscal policy due to sluggish economic growth and mounting debt. The central question revolves around whether there exists an alternative route to the path projected by the Congressional Budget Office (CBO) in its long-term forecasts. This book delves into the potential impact of implementing Swiss-style fiscal rules on the U.S. budget and economy over the next three decades. Through a dynamic simulation analysis, it is demonstrated that these fiscal rules have the potential to stabilize and reduce debt to sustainable levels within the forecast period. However, the government must maintain its policy credibility by demonstrating a steadfast commitment to addressing economic shocks. The recent economic crises have offered valuable lessons, and the framework required for this new era of fiscal policy may differ significantly from past approaches. While the implementation of new fiscal rules holds the promise of restoring long-term economic growth, empirical analysis highlights the inherent difficulties and why the United States is likely to persist in facing debt fatigue.

Weight: 452g
Dimension: 160 x 236 x 21 (mm)
ISBN-13: 9781666916607