Catastrophic budget failure

Leonard Burman, Jeffrey Rohaly, Joseph Rosenberg, Katherine C. Lim

Research output: Contribution to journalArticle

9 Citations (Scopus)

Abstract

Continuation of current U.S. fiscal policy will lead to an enormous accumulation of debt with potentially disastrous economic consequences. Exacerbated by the recent economic turmoil and fueled by the willingness of creditors to lend at very low interest rates, there is signifi cant risk that necessary fiscal reform will be put off. In this paper, we consider the causes, mechanisms, and macroeconomic fallout of a catastrophic budget failure - a situation in which markets' perception of the credit worthiness of the U.S. government rapidly deteriorates, leaving it unable to access credit markets at any reasonable rate of interest and generating a high probability of the previously unthinkable: the U.S. government defaulting on its debt obligations.

Original languageEnglish (US)
Pages (from-to)561-584
Number of pages24
JournalNational Tax Journal
Volume63
Issue number3
StatePublished - Sep 2010

Fingerprint

Government
Debt
Credit markets
Obligation
Willingness
Economic consequences
Macroeconomics
Fiscal reform
Credit
Interest rates
Fiscal policy
Economics

Keywords

  • Debt crisis
  • Fiscal policy

ASJC Scopus subject areas

  • Finance
  • Accounting
  • Economics and Econometrics

Cite this

Burman, L., Rohaly, J., Rosenberg, J., & Lim, K. C. (2010). Catastrophic budget failure. National Tax Journal, 63(3), 561-584.

Catastrophic budget failure. / Burman, Leonard; Rohaly, Jeffrey; Rosenberg, Joseph; Lim, Katherine C.

In: National Tax Journal, Vol. 63, No. 3, 09.2010, p. 561-584.

Research output: Contribution to journalArticle

Burman, L, Rohaly, J, Rosenberg, J & Lim, KC 2010, 'Catastrophic budget failure', National Tax Journal, vol. 63, no. 3, pp. 561-584.
Burman L, Rohaly J, Rosenberg J, Lim KC. Catastrophic budget failure. National Tax Journal. 2010 Sep;63(3):561-584.
Burman, Leonard ; Rohaly, Jeffrey ; Rosenberg, Joseph ; Lim, Katherine C. / Catastrophic budget failure. In: National Tax Journal. 2010 ; Vol. 63, No. 3. pp. 561-584.
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