Using a 'Debt Brake' to Solve Colorado's Debt Crisis
19 Pages Posted: 27 Dec 2019
Date Written: December 5, 2019
In recent years debt in Colorado has increased at an unsustainable rate. A debt brake is simulated for the Colorado economy. When the debt brake is triggered the spending cap imposed by the Tabor Amendment is reduced, with surplus revenue earmarked for debt reduction. The simulation analysis reveals that with the debt brake in place, over two decades debt in Colorado could be reduced to a sustainable level.
Keywords: debt, fiscal rules, fiscal policy, fiscal institutions, state debt, budget deficit, stabilization policy
JEL Classification: E62, E63, E66, H61, H62, H63, H68, H70, H71, H72, H74, H75, H76
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