scholarly journals 9. The Ricardian Approach to Budget Deficits

1990 ◽  
pp. 213-235
Keyword(s):  
Budget Deficits ◽  
Ricardian Approach

scholarly journals The Ricardian Approach to Budget Deficits

1989 ◽  
Vol 3 (2) ◽  
pp. 37-54 ◽  
Author(s):  
Robert J Barro
Keyword(s):  
Interest Rates ◽  
The United States ◽  
Alternative Theory ◽  
Budget Deficits ◽  
Large Current ◽  
Time Period ◽  
Ricardian Approach ◽  
David Ricardo ◽  
Harmful Effects ◽  
The U.S

In recent years there has been a lot of discussion about U.S. budget deficits. Many economists and other observers have viewed these deficits as harmful to the U.S. and world economies. The supposed harmful effects include high real interest rates, low saving, low rates of economic growth, large current-account deficits in the United States and other countries with large budget deficits, and either a high or low dollar (depending apparently on the time period). This crisis scenario has been hard to maintain along with the robust performance of the U.S. economy since late 1982. Persistent budget deficits have increased economists' interest in theories and evidence about fiscal policy. At the same time, the conflict between standard predictions and actual outcomes in the U.S. economy has, I think, increased economists' willingness to consider approaches that depart from the standard paradigm. In this paper, I will focus on the alternative theory that is associated with the name of David Ricardo.

Mechanisms of Resource Curse and Economic Policy

2007 ◽  
pp. 4-27 ◽  
Author(s):  
V. Polterovich ◽  
V. Popov ◽  
A. Tonis
Keyword(s):  
Real Exchange Rates ◽  
Resource Curse ◽  
Budget Deficits ◽  
Resource Abundance ◽  
Fuel Prices ◽  
Use Of Resources ◽  
Resource Wealth ◽  
The One ◽  
The Right ◽  
Rich Countries

This paper compares various mechanisms of resource curse leading to a potentially inefficient use of resources; it is demonstrated that each of these mechanisms is associated with market imperfections and can be "corrected" with appropriate government policies. Empirical evidence seems to suggest that resource abundant countries have on average lower budget deficits and inflation, and higher foreign exchange reserves. Besides, lower domestic fuel prices that are typical for resource rich countries have a positive effect on long-term growth even though they are associated with losses resulting from higher energy consumption. On top of that resource abundance allows to reduce income inequalities. So, on the one hand, resource wealth turns out to be conducive to growth, especially in countries with strong institutions. However, on the other hand, resource abundance leads to corruption of institutions and to overvalued real exchange rates. On balance, there is no solid evidence that resource abundant countries grow more slowly than the others, but there is evidence that they grow more slowly than could have grown with the right policies and institutions.

Rational Expectations and Inflation

2017 ◽  
Author(s):  
Thomas J. Sargent
Keyword(s):  
World War I ◽  
French Revolution ◽  
Rational Expectations ◽  
Ronald Reagan ◽  
Fiscal Policies ◽  
Economic Policies ◽  
Budget Deficits ◽  
Nobel Lecture ◽  
Economic Decisions ◽  
The French Revolution

This collection of essays uses the lens of rational expectations theory to examine how governments anticipate and plan for inflation, and provides insight into the pioneering research for which the author was awarded the 2011 Nobel Prize in economics. Rational expectations theory is based on the simple premise that people will use all the information available to them in making economic decisions, yet applying the theory to macroeconomics and econometrics is technically demanding. This book engages with practical problems in economics in a less formal, noneconometric way, demonstrating how rational expectations can satisfactorily interpret a range of historical and contemporary events. It focuses on periods of actual or threatened depreciation in the value of a nation's currency. Drawing on historical attempts to counter inflation, from the French Revolution and the aftermath of World War I to the economic policies of Margaret Thatcher and Ronald Reagan, the book finds that there is no purely monetary cure for inflation; rather, monetary and fiscal policies must be coordinated. This fully expanded edition includes the author's 2011 Nobel lecture, “United States Then, Europe Now.” It also features new articles on the macroeconomics of the French Revolution and government budget deficits.

Federal Budget Deficits and Long-Term Interest Rates in USA

CFA Digest ◽  
2009 ◽  
Vol 39 (3) ◽  
pp. 40-41
Author(s):  
Michael Kobal
Keyword(s):  
Interest Rates ◽  
Federal Budget ◽  
Budget Deficits
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