National Fiscal Issues

Place-based industrial interventionspolicies that promote production and investment in specific regionsare often proposed with the intent of improving economic conditions for residents, particularly \left-behind" workers in distressed local labor markets. This chapter discusses the theoretical...

For a place-based policy to succeed, it must target the right areastypically those with lower economic development and resident well-being. The US has two major place-based tax policies: the New Markets Tax Credit (NMTC), where government-approved entities select investments, and Opportunity Zones...

For more than 75 years, the federal government has been the largest funder of scientific research at US colleges and universities. Federal science funding includes both direct costs for specific research activities and indirect costs that support the facilities, equipment, and administrative...

Stimulus transfers are widely used during economic downturns, yet they are often poorly targeted from an economic perspective. I show that political incentives might help explain this discrepancy. I study one of the largest stimulus tax credits in Italy which excluded the poorest individuals and...

The US government has funded university research for nearly 80 years, with a significant share of this funding supporting the fixed costs of science through indirect cost recovery (ICR). We explain the history, objectives, and mechanics of ICR policy and review key controversies. We also provide new...

A college degree offers a pathway to economic mobility for low-income students. Using a multi-site randomized controlled trial combined with administrative and survey data, we demonstrate that intensive advising during high school and college significantly increases bachelors degree attainment among...

This paper examines the impact of reducing the administrative fragmentation of billing and payment, one commonly cited cause of inefficiency in US health care. We study a Medicare reform that consolidated billing processes across service types, using its staggered rollout and hospitals prior levels...

We quantify the private returns to government R&D contracts awarded to firms. We present new evidence that R&D contracts not only finance innovation but also embed an implicit government guarantee of noncompetitive future procurement for the winning R&D contractor. We measure its private value by...

Over the last several decades, there have been historic shifts in the structure of cash transfer programs in Western, developed countries, including the U.S., Canada, and U.K. For all three of these countries, the turn of the 21st century marked a shift away from unconditional cash transfer programs...

We study supply-side responses to student financial aid, focusing on how tuition responds to the targeting of aid. Our framework identifies two mechanisms: a direct effect, which raises tuition, and a composition effect, which can lower tuition if aid targets price-sensitive students. Leveraging a...

Conditionality can prevent poor households from receiving cash transfers. Re-analyzing five randomized evaluations of conditional cash transfers, we find: (1) non-compliers households that do not meet education conditions are common, representing 4.6% to 37% of eligible households; (2) non...

Opinion is sharply divided about whether the bombing of an enemy's civilian targets and the killing of their combatants results in an adversary's population becoming pacifist or pro-military. Identification is difficult because natural experiments are rare, and effects may be heterogeneous. For...

Could policy changes boost economic growth enough and at a low enough cost to meaningfully reduce federal budget deficits? We assess seven areas of economic policy: immigration of high-skilled workers, housing regulation, safety net programs, regulation of electricity transmission, government...

We highlight the role of duration and exchange rate risks on portfolio flows by using a unique and comprehensive database of US investor flows into emerging market government bonds denominated in local currency. Borrowing long-term mitigates roll-over risk but amplifies valuation changes that...

Even allowing for substantial uncertainty regarding projections, current US fiscal policies are almost certainly unsustainable. Therefore, policymakers must decide when and in what ways to change policies. Changing policies sooner rather than later would put debt on a lower trajectory and thereby...

While US biomedical research funding generally allows researchers considerable freedom in determining the most promising topics to study, there have been some programs, such as the War on Cancer in the 1970s and Operation Warp Speed during the COVID-19 pandemic, that target funding at particular...

Governments and firms often employ soft spending limits to restrict overspending while still allowing exceptions on a case-by-case basis. This paper studies a Medicare policy which capped per-patient physical therapy spending, with exceptions for patients with documented medical need. The cap...

Amid rising global interest in state interventions, this paper examines how Chinas infrastructure investmentsa key macroeconomic policy toolaffect firm productivity. We focus on a policy that encourages regional governments to improve market conditions for private enterprises. Our analysis shows...

We document that the long-run economic benefits of a low-cost early-life health intervention transmit to later generations, but only for children of exposed mothers. We provide novel evidence that the program improved mothers' marriage outcomes but had limited effects on fathers' partnering...

The U.S. government has funded university research for nearly 80 years, with a significant share of this funding supporting the fixed costs of science through indirect cost recovery (ICR). We explain the history, objectives, and mechanics of ICR policy and review key controversies. We also provide...

How should governments structure primary sovereign bond markets when investors face asymmetric uncertainty about default risk and total demand? Standard protocols either use uniform prices for all investors, or price discriminate based on bid prices (pay as bid). Uniform pricing encourages more...

Liquidity management is key in industries with variable cash flows. We study how businesses in the highway construction industry manage cash flow by strategically bidding more on work with an earlier payouta practice known as front-end loading. We find that small contractors, infrequent bidders, and...

Many community organizations provide services similar to government programs, but there is limited evidence how increased government aid affects the use and availability of charitable services. This study examines how greater access to federal nutrition assistance through schoolwide free meal...

The European place-based policy framework was established in the European Treaties and has a current budget of $60-70 billion per year. This paper identifies key features and directions for its future development with respect to three place-based problems: traditionally lagging regions; contemporary...

In Latin Americathe world's most unequal regionnon-white rural populations disproportionately suffer from Chagas disease, a neglected tropical disease (NTD) that causes weeks of acute symptoms and can lead to chronic heart problems decades later. We demonstrate that Brazil's post-1983 campaign to...

In 2009, responding to the so-called Great Recession, the federal government initiated a stimulus program, the American Recovery and Reinvestment Act (ARRA), that included infrastructure spending. The state of Texas used this funding to improve highways. It reaped a double benefit: the spending...

Budget set kinks are much studied in economics, including in the context of bunching estimators that assume individuals react to the true marginal tax rate. We document that individuals disproportionately left-bunch below kinks in the context of the Social Security Earnings Test where incentives...

Scientific projects that carry a high degree of risk may be more likely to lead to breakthroughs yet also face challenges in winning the support necessary to be carried out. We analyze the determinants of renewal for more than 100,000 R01 grants from the National Institutes of Health between 1980...

The European place-based policy framework was established in the European Treaties and has a current budget of $60-70 billion per year. This paper identifies key features and directions for its future development with respect to three place-based problems: traditionally lagging regions; contemporary...

Axel Brsch-Supan and Courtney Coile, editors. Employment among older men and women has increased dramatically in recent years, reversing a downward trend in the closing decades of the twentieth century. Social Security Programs and Retirement around the World: The Effects of Reforms on Retirement...

We exploit policy discontinuities in Poland's unemployment insurance to examine the causal effect of changes to both benefit durations and levels. Using a regression discontinuity approach, we uncover three findings: (1) Higher benefit levels distort employment more than benefit extensions. (2)...

Employment among older men and women has increased dramatically in recent years, reversing a downward trend in the closing decades of the twentieth century. Social Security Programs and Retirement around the World: The Effects of Reforms on Retirement Behavior examines how changing retirement...

During World War II, the U.S. Committee on Medical Research (CMR) undertook an integrated, cross-sectoral effort to develop medical science and technology for war, representing the U.S. government's first substantial investment in medical research. Although it had mixed results during the war, using...

Place-based industrial interventionspolicies that promote production and investment in specific regionsare often proposed with the intent of improving economic conditions for residents, particularly "left-behind" workers in distressed local labor markets. This chapter discusses the theoretical...

We leverage decades of administrative data and quasi-experimental variation in the introduction of universal long-term care (LTC) insurance in Germany in 1995 to examine whether health insurance expansions can stimulate local economies. We find that the LTC insurance rollout led not only to sizeable...

By design, official budget estimates for legislative proposals generally exclude the proposals likely effects on labor, capital, productivity, and output, as well as any feedback from such effects to the federal budget. Policymakers would benefit from knowing the expected sizes of those effects, and...

Particulate matter (PM) is a major, clinically important air pollutant. A large portion of emitted PM crosses borders, damaging health outside of its originating jurisdiction, but due in part to technical obstacles these pollutant flows remain unregulated. Proposed attribution approaches assume that...

Though Social Security is typically considered a program to support retirees, nearly one in ten children live in a home with Social Security income. Children are substantially more likely to live with an older adult than they were two decades ago, and they are twice as likely to report Social...

We use administrative records on the healthcare utilization and economic outcomes of the universe of Danish households to characterize survivors' mental health following their spouse's death. We provide visually clear evidence for the inevitable immediate, large, and lingering adverse impacts and...

Any fiscal path is sustainable if future fiscal policy responds sufficiently to high deficits. Previous work found that Congress reduced the deficit during 1984-2003 when projected deficits rose. We find that this year-to-year feedback has disappeared: Congress on average during 2004-2024 did not...

Standard deficit accounting neglects the growth dividend: the amount by which annual GDP growth shrinks the debt-GDP ratio. America's growth dividend has more than doubled since the Great Recession because the debt ratio has more than doubled, leading to headline deficits that far exceed changes in...

Unemployment can jeopardize the ability of households to purchase enough food. During the COVID-19 pandemic, when unemployment rose rapidly, 27 percent of households with children reported that they could not always afford enough food. In The Effects of Lump-Sum Food Benefits during the COVID-19...

Non-disabled, working age adults without children are required to work 20 hours per week in order to maintain eligibility for the Supplemental Nutrition Assistance Program. However, states may waive the work requirement for areas that meet conditions reflective of a weak labor market. We construct a...

We study highway procurement in Texas during the Great Recession and stimulus period, finding increased competition with more bidders and lower bids. We argue that the recession reduced opportunity costs, in part due to a slump in private-sector construction. We evaluate costs and efficiency by...

Tax benefits tied to children form a central component of the social safety net in the United States. To participate in these programs, taxpayers must claim a child on their tax return. We study the claiming of children on tax returns by drawing on health insurance information returns to establish...

This paper defines the first measure of economic resilience based on the cumulative current and future losses a shock-exposed household experiences relative to a counterfactual measure of what household economic well-being would have been absent the shock. Drawing on the rich economics literature on...

Incarcerated individuals in the U.S. purchase goods and services from monopoly vendors selected by their correctional authority. We study telecommunications, which have come under bipartisan scrutiny due to the high prices inmates pay for phone calls. Prospective providers are evaluated on their...

Can temporary wartime mobilization change the long-run development trajectory of an economy? We study how mobilization for World War II in colonial India influenced its subsequent development. From 1939 to 1945, the British colonial government purchased massive amounts of war materiel within India....