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Debt Hangover in the Aftermath of the Great Recession

Stéphane Auray, Aurélien Eyquem and Paul Gomme ()

No 1829, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon

Abstract: Following the Great Recession, U.S. government debt levels exceeded 100% of output. We develop a macroeconomic model to evaluate the role of various shocks during and after the Great Recession; labor market shocks have the greatest impact on macroeconomic activity. We then evaluate the consequences of using alternative fiscal policy instruments to implement a fiscal austerity program to return the debt-output ratio to its pre-Great Recession level. Our welfare analysis reveals that there is not much difference between applying fiscal austerity through government spending, the labor income tax, or the consumption tax; using the capital income tax is welfare-reducing.

Keywords: Fiscal policies; tax reforms; government debt; government deficits (search for similar items in EconPapers)
JEL-codes: E24 E37 E62 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge and nep-mac
Date: 2018
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ftp://ftp.gate.cnrs.fr/RePEc/2018/1829.pdf (application/pdf)

Related works:
Journal Article: Debt hangover in the aftermath of the Great Recession (2019) Downloads
Working Paper: Debt Hangover in the Aftermath of the Great Recession (2019)
Working Paper: Debt Hangover in the Aftermath of the Great Recession (2018) Downloads
Working Paper: Debt Hangover in the Aftermath of the Great Recession (2017) Downloads
Working Paper: Debt Hangover in the Aftermath of the Great Recession (2017) Downloads
Working Paper: Debt Hangover in the Aftermath of the Great Recession (2017) Downloads
Working Paper: Debt Hangover in the Aftermath of the Great Recession (2017)
Working Paper: Debt Hangover in the Aftermath of the Great Recession (2017)
Working Paper: Debt Hangover in the Aftermath of the Great Recession (2017)
Working Paper: Debt Hangover in the Aftermath of the Great Recession (2016) Downloads
Working Paper: Debt Hangover in the Aftermath of the Great Recession (2016)
Working Paper: Debt Hangover in the Aftermath of the Great Recession (2016)
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