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Threshold Effects in the U.S. Budget Deficit
Author(s) -
Arestis Philip,
Cipollini Andrea,
Fattouh Bassam
Publication year - 2004
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1093/ei/cbh055
Subject(s) - economics , deficit spending , per capita , federal budget , government budget , government (linguistics) , autoregressive model , macroeconomics , econometrics , public finance , debt , finance , population , linguistics , philosophy , demography , sociology , fiscal year
We contribute to the debate on whether the U.S. large federal budget deficits are sustainable in the long run. We model the U.S. government deficit per capita as a threshold autoregressive process. We find evidence that the U.S. budget deficit is sustainable in the long run and that economic policy makers will only intervene to reduce per capita deficit when it reaches a certain threshold. (JEL C32 , E62 )