Understanding the Relationship Between Changes to Federal Fiscal Policy and Near-Term Real GDP Growth: Working Paper 2025-01

Jaeger Nelson and Matthew Wilson ()

No 61171, Working Papers from Congressional Budget Office

Abstract: We introduce two measures which highlight the relationship between changes in federal fiscal policy and economic growth. First, we conduct a growth decomposition exercise to compute the short-run direct effects of changes in policy on real GDP growth, which we call the Federal Fiscal Impulse (FFI). Second, we build on this measure to develop the Federal Fiscal Impulse Index (FFII) which interprets changes in the components of fiscal policy relative to the growth rate of real GDP over recent history. Finally, we project these measures through 2026 using CBO's June 2024

JEL-codes: E17 E66 H30 (search for similar items in EconPapers)
Date: 2025-02-19
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Persistent link: https://EconPapers.repec.org/RePEc:cbo:wpaper:61171

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