Threshold Effects in the U.S. Budget Deficit

Philip Arestis, Andrea Cipollini and Bassam Fattouh

Economic Inquiry, 2004, vol. 42, issue 2, 214-222

Abstract: 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. (JEL C32, E62) Copyright 2004, Oxford University Press.

JEL-codes: C32 E62 (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (36)

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Working Paper: Threshold Effects in the US Budget Deficit (2003)
Working Paper: Threshold Effects in the U.S. Budget Deficit (2002)
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