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Article Dans Une Revue Journal of Economic Dynamics and Control Année : 2019

Debt Hangover in the Aftermath of the Great Recession

Résumé

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.

Dates et versions

halshs-02176531 , version 1 (08-07-2019)

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Stéphane Auray, Aurélien Eyquem, Paul Gomme. Debt Hangover in the Aftermath of the Great Recession. Journal of Economic Dynamics and Control, 2019, 105, pp.107-133. ⟨10.1016/j.jedc.2019.06.001⟩. ⟨halshs-02176531⟩
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