The Macroeconomics of Fiscal Policy

The United States's post-World War II emphasis on activist fiscal policy forshort-term economic stabilization was called into question in the 1960s, and by the late 1980s wassuperseded by the view that fiscal policy should focus on long-run structural concerns. For the pasttwo decades both public policy and economic research emphasized monetary policy as a stabilizationtool. But there remain issues in American macroeconomic policy having to do with budget deficits,present and projected, as well as a recent revival of interest in fiscal policy as a stabilizationtool. Overall, the academic pendulum is swinging back towards a renewed consideration of fiscalpolicy.This volume brings together leading researchers and policy makers to assess the effectivenessand consequences of fiscal policy. Drawing on postwar policy experience and recent economicresearch, this book offers a state-of-the-art consideration of where fiscal policy stands today.Contributors address both the appropriateness of fiscal policy as a tool for short-run macroeconomicstabilization and the longer-term impact of fiscal decisions and economic policy. Topics coveredinclude the legacy of the Reagan administration's tax cuts; whether public policy has encouragedsuch behavior as "overconsumption," which may foster persistent budget and trade deficits; and, inlight of recent experience, how and when fiscal policy might be appropriate as a short-termstabilization tool.Contributors:Alan J. Auerbach, Susanto Basu, Olivier J. Blanchard, Alan S.Blinder, Barry P. Bosworth, W. Elliott Brownlee, William H. Buiter, Jonathan Coppel, Jean-PhilippeCotis, Luiz de Mello, James S. Duesenberry, Douglas W. Elmendorf, Eric Engen, Jeffrey A. Frankel,Benjamin M. Friedman, Richard W. Kopcke, Catherine L. Mann, Van Doorn Ooms, Rudolph G. Penner, AliceM. Rivlin, Christopher A. Sims, C. Eugene Steuerle, Geoffrey M.B. Tootell, Robert K. Triest, EdwinM. Truman

Robert K. Triest is Senior Economist and Policy Advisor at the Federal Reserve Bank of Boston.