Found 532 article(s) in category 'Fiscal Policy'

Saving the heartland: Place-based policies in 21st Century America

Saving the heartland: Place-based policies in 21st Century America. Edward Glaeser, Lawrence Summers, March 8, 2018, Paper, “America’s regional disparities are large and regional convergence has declined if not disappeared. This wildly uneven economic landscape calls for a new look at spatially targeted policies. There are three plausible justifications for place-based policies–agglomeration economies, spatial equity and larger marginal returns to targeting social distress in high distress areas. The second justification is stronger than the first and the third justification is stronger than the second. The enormous social costs of non-employment suggests that fighting long-term joblessness is more important than fighting income inequality. Stronger tools, such as spatially targeted employment credits, may be needed in West Virginia than in San Francisco.Link

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Reagan’s Cure for America’s Debt Disease

Reagan’s Cure for America’s Debt Disease. Martin Feldstein, March 5, 2018, Opinion, “The federal government’s most urgent domestic challenge is the exploding debt and deficit. America’s debt nearly doubled during the Obama years, reaching 76% of gross domestic product in 2017. If nothing is done it will surpass 100% of GDP within a decade. The U.S. will then have one of the highest debt ratios in the industrial world—topped only by countries like Greece, Italy and Japan.Link

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Is it the ”How” or the ”When” that Matters in Fiscal Adjustments?

Is it the ”How” or the ”When” that Matters in Fiscal Adjustments? Alberto Alesina, March 2018, Paper, “Using data from 16 OECD countries from 1981 to 2014 we study the effects on output of fiscal adjustments as a function of the composition of the adjustment–that is, whether the adjustment is mostly based on spending cuts or on tax hikes–and of the state of the business cycle when the adjustment is implemented. We find that both the ”how” and the ”when” matter, but the heterogeneity related to the composition is more robust across different specifications. Adjustments based upon permanent spending cuts are consistently much less costly than those based upon permanent tax increases. Our results are generally not explained by different reactions of monetary policy. However, when the domestic central bank can set interest rates–that is outside of a currency union–it appears to be able to dampen the recessionary effects of consolidations implemented during a recession.Link

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Summers Warns Next U.S. Recession Could Outlast Previous One

Summers Warns Next U.S. Recession Could Outlast Previous One. Lawrence Summers, February 28, 2018, Video, “The next U.S. recession could drag on longer than the last one that stretched 18 months. That’s the assessment of former Treasury Secretary Larry Summers. With the economy in its ninth year of expansion, even if one were to take a hawkish view of upcoming Federal Reserve tightening, it would be some time before the level of interest rates rates gets high enough to allow them to again be reduced by the 500 basis points typical for a U.S. recession, Summers said at a conference in Abu Dhabi.” Link

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What Is The US Health Spending Problem?

What Is The US Health Spending Problem? David Cutler, February 14, 2018, Paper, “Is increased spending on medical care harmful to the US economy? The overall share of the gross domestic product spent on medical care is not a problem, provided that the services bought are worth more than their cost. However, high and rising costs expose two often-overlooked problems. First, spending is too high because many dollars are wasted. Estimates suggest that unnecessary medical spending costs the typical American family thousands of dollars each year.Link

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Congress’ budget dysfunction is more than 4 decades in the making

Congress’ budget dysfunction is more than 4 decades in the making. Linda Bilmes, February 9, 2018, Opinion, “In an eleventh-hour twist, Sen. Rand Paul protested the costs of Congress’ latest budget deal and briefly shut down the federal government. Then, in the wee hours of Feb. 9, both houses of Congress eventually voted to pass the budget deal – a bipartisan agreement to repeal expenditure limits and fund the government for the next two years, if everything goes to plan. However, Paul’s midnight brinkmanship cast a sour note on its passage.Link

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Pandemic risk: how large are the expected losses?

Pandemic risk: how large are the expected losses? Lawrence Summers, 2018, Paper, “There is an unmet need for greater investment in preparedness against major epidemics and pandemics. The arguments in favour of such investment have been largely based on estimates of the losses in national incomes that might occur as the result of a major epidemic or pandemic. Recently, we extended the estimate to include the valuation of the lives lost as a result of pandemic-related increases in mortality. This produced markedly higher estimates of the full value of loss that might occur as the result of a future pandemic. We parametrized an exceedance probability function for a global influenza pandemic and estimated that the expected number of influenza-pandemic-related deaths is about 720 000 per year.Link

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High-Priced Drugs in Medicare Part D: Diagnosis and Potential Prescription

High-Priced Drugs in Medicare Part D: Diagnosis and Potential Prescription. Richard Zeckhauser, January 2018, Paper, “Drug pricing in the U.S. is a persistently vexing policy problem. While there is agreement among many policy analysts that supra competitive prices are necessary to promote innovation; significant disagreements arise over how much pricing discretion prescription drug manufacturers should be permitted, and what portion of the sum of producer plus consumer surplus in the prescription drug market should be claimed by manufacturers relative to consumers and other payers. This paper focuses on an extremely costly component of the Medicare Part D program the region of coverage that kicks in once a consumer has spent $4,950 on drugs in a calendar year (roughly $8,100 in total drug spending).” Link

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What do we know about the effects of Austerity?

What do we know about the effects of Austerity? Alberto Alesina, January 2018, Paper, “This paper summarizes the results of a large recent literature on multi year fiscal plans for deficit reduction (austerity). The key results are that deficit reduction policies based upon spending cuts are much less costly in terms of short run output losses than tax based adjustments. On average fiscal adjustment based upon spending cuts have very small output costs and in some cases they are expansionary. We then discuss which possible models can explain these findings and discuss how the evidence can disentangle them.Link

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