Threshold Effects in the U.S. Budget Deficit

We contribute to the debate on whether the U.S. large federal budget deficits are sustainable in the long run. We model the U.S. government deficit per capita as a threshold autoregressive process. We find evidence that the U.S. budget deficit is sustainable in the long run and that economic policy...

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Veröffentlicht in:	Economic inquiry 2004-04, Vol.42 (2), p.214-222
Hauptverfasser:	Arestis, Philip, Cipollini, Andrea, Fattouh, Bassam
Format:	Artikel
Sprache:	eng
Schlagworte:	Budget deficits Economic aspects Economic models Economic theory Evaluation Federal budget Fiscal policy Forecasts and trends Management Regression analysis Studies
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Beschreibung
Zusammenfassung:	We contribute to the debate on whether the U.S. large federal budget deficits are sustainable in the long run. We model the U.S. government deficit per capita as a threshold autoregressive process. We find evidence that the U.S. budget deficit is sustainable in the long run and that economic policy makers will only intervene to reduce per capita deficit when it reaches a certain threshold. (JEL C32, E62)
ISSN:	0095-2583 1465-7295
DOI:	10.1093/ei/cbh055