Munich Personal RePEc Archive

Debt and nonlinear fiscal policy: evidence from the states

Gray, Jo Anna and Stone, Joe A. (2012): Debt and nonlinear fiscal policy: evidence from the states.

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Abstract

Evidence from a half century of experience by states identifies nonlinearities in the effects of debt and fiscal policy on growth. Effects are Keynesian for low to moderate levels of debt and stimulus but anti Keynesian for sufficiently high levels of debt or stimulus. Results are broadly consistent with models by Barro (1999), Judd (1987), and others.

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