Debt Hangover in the Aftermath of the Great Recession
Author | : Stéphane Auray |
Publisher | : |
Total Pages | : 52 |
Release | : 2018 |
ISBN-10 | : OCLC:1304324579 |
ISBN-13 | : |
Rating | : 4/5 (79 Downloads) |
Download or read book Debt Hangover in the Aftermath of the Great Recession written by Stéphane Auray and published by . This book was released on 2018 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: Following the Great Recession, U.S. government debt levels exceeded 100% of output. We develop a macroeconomic model to evaluate the role of various shocks during and after the Great Recession; labor market shocks have the greatest impact on macroeconomic activity. We then evaluate the consequences of using alternative fiscal policy instruments to implement a fiscal austerity program to return the debt-output ratio to its pre-Great Recession level. Our welfare analysis reveals that there is not much difference between applying fiscal austerity through government spending, the labor income tax, or the consumption tax; using the capital income tax is welfare-reducing.