TY  - JOUR
AU  - Barro,Robert J.
TI  - The Behavior of U.S. Deficits
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1309
PY  - 1986
Y2  - December 1986
UR  - http://www.nber.org/papers/w1309
L1  - http://www.nber.org/papers/w1309.pdf
N1  - Author contact info:
Robert J. Barro
Department of Economics
Littauer Center 218
Harvard University
Cambridge, MA 02138
Tel: 617/495-3203
Fax: 617/496-8629
E-Mail: rbarro@harvard.edu
AB  - The tax-smoothing theory suggests that deficits would respond particularly to recession, temporarily high government spending, and anticipated inflation. My empirical estimates indicate that a relation of this type is reasonably stable in the U.S. since at least 1920. In particular, the statistical evidence does not support the idea that there has been a shift toward a fiscal policy that generates either more real public debt on average or that generates larger deficits in response to recessions. Further, the deficits for 1982-83 and projections for 1984 are consistent with the previous structure. The high values of these deficits reflect the customary response to substantial recession (interacting with big government) and to expected inflation.
ER  -