Fiscal Imbalance: A Primer

32 Pages Posted: 27 May 2016

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Cato Institute

Cato Institute

Jeffrey A. Miron

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: December 8, 2015

Abstract

The concept of fiscal imbalance is familiar to economists but less so to policymakers, politicians, and the public. Yet understanding this concept is essential to rational discussion of government financial health. This paper provides a primer on government fiscal imbalance.

The material is not new, and the presentation does not aim at those familiar with the topic. Instead, the paper reviews key principles and fundamental implications; it targets those who are interested in understanding the true state of government financial health but puzzled by apparently conflicting claims about whether the major economies are going bankrupt. This primer does not resolve those conflicts, but by explicating the concept of fiscal imbalance, and reviewing the relevant facts, the discussion provides a framework for evaluating the competing claims.

Keywords: deficit, debt, fiscal balance, medicare, social security, excess spending

JEL Classification: H6, H62, H68, H55, H5

Suggested Citation

Institute, Cato and Miron, Jeffrey A., Fiscal Imbalance: A Primer (December 8, 2015). Cato Institute White Paper, 2015. Available at SSRN: https://ssrn.com/abstract=2784888

Cato Institute (Contact Author)

Cato Institute ( email )

1000 Massachusetts Avenue, N.W.
Washington, DC 20001-5403
United States

Jeffrey A. Miron

Harvard University - Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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