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.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: debt; fiscal policy; nonlinear;growth; Keynes
• Subjects: E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy; B - History of Economic Thought, Methodology, and Heterodox Approaches > B2 - History of Economic Thought since 1925 > B22 - Macroeconomics; A - General Economics and Teaching > A1 - General Economics > A10 - General

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