Hidden Bibliographic Details
| Other authors / contributors: | Hasanov, Fuad, 1978-
International Monetary Fund. Institute for Capacity Development.
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| ISBN: | 1475541279
9781475541274
1475510551
9781475510553
1475565542
9781475565546
9781475510553
9781475565546
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| Digital file characteristics: | data file
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| Notes: | At head of title: Institute for Capacity Development.
"September 2012."
Includes bibliographical references (pages 14-16).
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| Summary: | The author studies how macroeconomic shocks affect U.S. public debt dynamics using a VAR with debt feedback. Following a fiscal austerity shock, the debt ratio initially declines and then returns to its pre-shock path. Yet, the effect is not statistically significant. In a weak economic environment, the likelihood of a self-defeating austerity shock is much higher than in normal times. An inflation shock only slightly reduces the debt ratio for a few quarters. A positive growth shock unambiguously lowers debt. In our specification, the debt ratio is stationary, whereas a VAR excluding debt may imply an explosive debt path.
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| Standard no.: | 10.5089/9781475541274.001
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