6533b7dbfe1ef96bd12705f5

RESEARCH PRODUCT

Threshold Effects in the U.S. Budget Deficit. ECONOMIC INQUIRY

Arestis P.Fattouh B.Andrea Cipollini

subject

intertemporal solvencythreshold cointegration

description

We contribute to the debate on whether the U.S. large federal budget deficits are sustainable in the long run. We model the U.S. government deficit per capita as a threshold autoregressive process. We find evidence that the U.S. budget deficit is sustainable in the long run and that economic policy makers will only intervene to reduce per capita deficit when it reaches a certain threshold.

10.1093/ei/cbh055http://hdl.handle.net/10447/101787