Social and Behavioral Sciences Commons^™

The Consequences Of The Federal Deficit: An Empirical Analysis, John T. Knadler

Kaleidoscope

One of the major issues of political debate in the United States during the past 20 years has been the potential consequences of rising federal deficits. Some politicians and economists argue for the traditional view that deficits increase interest rates and erode private savings, while those who hold the Ricardian equivalence view believe that economic agents are forward looking and will realize that a tax cut today will cause a future deficit, thus they will not change their behavior in response to the increase in wealth from the tax cut. My research was designed to determine through econometric regression analysis …