Using a 'Debt Brake' to Solve Colorado's Debt Crisis

19 Pages Posted: 27 Dec 2019

See all articles by John D. Merrifield

John D. Merrifield

University of Texas at San Antonio

Barry W. Poulson

University of Colorado Boulder

Date Written: December 5, 2019

Abstract

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

Suggested Citation

Merrifield, John D. and Poulson, Barry W., Using a 'Debt Brake' to Solve Colorado's Debt Crisis (December 5, 2019). Available at SSRN: https://ssrn.com/abstract=3499129 or http://dx.doi.org/10.2139/ssrn.3499129

John D. Merrifield

University of Texas at San Antonio ( email )

One UTSA Circle
San Antonio, TX 78249
United States

Barry W. Poulson (Contact Author)

University of Colorado Boulder ( email )

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