Falling Expenditures, Rising Receipts

Fiscal Slope Negotiations in the Context of Current Expenditures and Current Receipts by Menzie Chinn, Econbrowser The latter (receipts) are stabilizing at extremely low levels. To place matters in perspective, note that even before 2008, tax revenues were low by historical standards. That was due to tax reductions passed in 2001 and 2003 (EGTRRA and …

Lost Decades

by Menzie Chinn, Econbrowser Here’s my 25 minute presentation of Lost Decades at the Rotary Club of Madison, on January 4th (as recorded by Wisconsin Eye) Powerpoint. One point I made was that the global financial crisis and ensuing recession have exacted a tremendous cost on the US economy. In the absence of more aggressive …

Consumption: Distinguishing between Keynesian and Permanent Income Motivations, and Deleveraging

Guest Author: Menzie Chinn, who is Professor of Public Affairs and Economics, Robert M. La Follette School of Public Affairs, University of Wisconsin, Madison, WI – Vita.  This post originally appeared December 5 at Econbrowser. One of the startling things about consumption behavior is that, despite the burst of spending surrounding the holiday season, per …

The Trillion Dollar War of Choice and the Constraints on Macro Policy

by Guest Author Menzie Chinn

The cost of the Iraq War has reached almost trillion dollars – at least $805.6 billion as of the end of September, not including debt service and additional reset costs; around $940 billion including interest payments.

As the US economy faces the prospects of stagnant growth or recession, it is of interest to see why the scope for fiscal policy is so circumscribed — that is, why is the debt level so high given that in the last year of the Clinton Administration we were paying down debt? Figure 1 depicts part of the answer (other parts, here).