How does the U.S. government finance fiscal shocks?

Antje Berndt, Hanno Lustig and Sevin Yeltekin ()

No 2006-E70, GSIA Working Papers from Carnegie Mellon University, Tepper School of Business

Abstract: We develop a method for identifying and quantifying the fiscal channels that help finance government spending shocks. We define fiscal shocks as surprises in defense spending and show that they are more precisely identified when defense stock data are used in addition to aggregate macroeconomic data. Our results show that in the postwar period, about 9% of the U.S. government’s unantic- ipated spending needs were financed by a reduction in the market value of debt and more than 70% by an increase in primary sur- pluses. Additionally, we find that long-term debt is more effective at absorbing fiscal risk than short-term debt.

References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://student-3k.tepper.cmu.edu/gsiadoc/wp/2006-E70.pdf
Our link check indicates that this URL is bad, the error code is: 401 Unauthorized

Related works:
Journal Article: How Does the US Government Finance Fiscal Shocks? (2012)
Working Paper: How Does the U.S. Government Finance Fiscal Shocks? (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cmu:gsiawp:1153249048

Ordering information: This working paper can be ordered from
https://student-3k.t ... /gsiadoc/GSIA_WP.asp

Access Statistics for this paper

More papers in GSIA Working Papers from Carnegie Mellon University, Tepper School of Business Tepper School of Business, Carnegie Mellon University, 5000 Forbes Avenue, Pittsburgh, PA 15213-3890.
Bibliographic data for series maintained by Steve Spear ().