Policies to Reduce Federal Budget Deficits by Increasing Economic Growth

Douglas Elmendorf, Robert Hubbard and Zachary Liscow

No 33834, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Could policy changes boost economic growth enough and at a low enough cost to meaningfully reduce federal budget deficits? We assess seven areas of economic policy: immigration of high-skilled workers, housing regulation, safety net programs, regulation of electricity transmission, government support for research and development, tax policy related to business investment, and permitting of infrastructure construction. We find that growth-enhancing policies almost certainly cannot stabilize federal debt on their own, but that such policies can reduce the explicit tax hikes, spending cuts, or both that are needed to stabilize debt. We also find a dearth of research on the likely impacts of potential growth-enhancing policies and on ways to design such policies to restrain federal debt, and we offer suggestions for ways to build a larger base of evidence.

JEL-codes: D24 E62 H62 I38 J61 O38 Q48 Q58 R38 (search for similar items in EconPapers)
Date: 2025-05
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