Fiscal Deficits and Current Account Deficits.

Fiscal Deficits and Current Account Deficits.

The effectiveness of recent fiscal stimulus packages significantly depends on the assumption of non-Ricardian savings behavior. We show that, under the same assumption, fiscal deficits can have worrisome implications if they turn out to be permanent. First, if they occur in large countries they sign...

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Bibliographic Details
Main Author: Kumhof, Michael
Other Authors: Laxton, Douglas
Format: eBook
Language:English
Published: Washington : International Monetary Fund, 2009.
Series:IMF Working Papers.
Subjects:
Finance, Public > Econometric models.
Debts, Public.
Accounts current.
Fiscal policy.
Accounts current
Debts, Public
Finance, Public > Econometric models
Fiscal policy
Online Access:Click for online access
Table of Contents:
  • Cover Page; Title Page; Copyright Page; Contents; I. Introduction; 1. IMF WEO and CBO Baseline Deficit and Debt Projections for the United States; 2. CBO Long-Term Projections for U.S. Fiscal Deficits and Debt; II. The Model; A. Households; 3. Dissaving and the Role of the Planning Horizon; B. Firms; 1. Manufacturers; 2. Distributors; 3. Retailers; C. Government; 1. Budget Constraint; 2. Fiscal Policy; 3. Monetary Policy; D. Equilibrium and Balance of Payments; III. Calibration; IV. Permanent Increases in Fiscal Deficits; A.U.S. Fiscal Deficits.
  • 4. One Percentage Point Deficit Shock, Instrument = Taxation, Part I5. One Percentage Point Deficit Shock, Instrument = Taxation, Part II; 6. One Percentage Point Deficit Shock, Instrument = Taxation, Part III; 7. Current Account Deficit and the Planning Horizon; 8. Real Interest Rate and the Planning Horizon; B. Sensitivity Analysis; C. Small Open Economies; 9. One Percentage Point Deficit Shock in a Small Open Economy; 10. Large Open Economy Dissaving; 11. Small Open Economy Dissaving; V. Conclusion; References; Footnotes.

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