Effect of Expected Future Government Deficits on Current Economic Activity

23 Pages Posted: 12 Apr 2004 Last revised: 16 Jul 2010

See all articles by Ray C. Fair

Ray C. Fair

Yale University - Cowles Foundation; Yale School of Management - International Center for Finance

Date Written: March 1984

Abstract

This paper considers that possibility that expected future government deficits directly affect economic decisions, in particular the decisions of the Federal Reserve. Some evidence is presented in Section II that indicates that the behavior of the Fed may be influenced by expected future deficits.The economic consequences of this behavior are examined in Section III. The results in this section show that fiscal policy is less effective if the Fed responds to expected future deficits than otherwise. Quantitative estimates of the differences in fiscal-policy effects are presented.

Suggested Citation

Fair, Ray C., Effect of Expected Future Government Deficits on Current Economic Activity (March 1984). NBER Working Paper No. w1293. Available at SSRN: https://ssrn.com/abstract=321336

Ray C. Fair (Contact Author)

Yale University - Cowles Foundation ( email )

Box 208281
New Haven, CT 06520-8281
United States
203-432-3715 (Phone)
203-432-6167 (Fax)

HOME PAGE: http://fairmodel.econ.yale.edu

Yale School of Management - International Center for Finance ( email )

Box 208200
New Haven, CT 06520
United States
203-432-3715 (Phone)
203-432-6167 (Fax)

HOME PAGE: http://fairmodel.econ.yale.edu

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