Quarterly Review 1611

How Little We Know About Deficit Policy Effects

Preston J. Miller | Former Vice President and Monetary Adviser
William Roberds

Winter 1992

We use a simple model to show why previous empirical studies of budget policy effects are flawed. Due to an identification problem, those studies' findings can be shown to be consistent with policies either mattering or not. We argue that this problem is difficult and not likely to be resolved soon.

Download Paper (pdf)