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 language | English (US) |
|---|---|
| Pages (from-to) | 561-584 |
| Number of pages | 24 |
| Journal | National Tax Journal |
| Volume | 63 |
| Issue number | 3 |
| State | Published - Sep 2010 |
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Keywords
- Debt crisis
- Fiscal policy
ASJC Scopus subject areas
- Finance
- Accounting
- Economics and Econometrics
Cite this
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 journal › Article
}
TY - JOUR
T1 - Catastrophic budget failure
AU - Burman, Leonard
AU - Rohaly, Jeffrey
AU - Rosenberg, Joseph
AU - Lim, Katherine C.
PY - 2010/9
Y1 - 2010/9
N2 - 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.
AB - 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.
KW - Debt crisis
KW - Fiscal policy
UR - http://www.scopus.com/inward/record.url?scp=84864299088&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84864299088&partnerID=8YFLogxK
M3 - Article
VL - 63
SP - 561
EP - 584
JO - National Tax Journal
JF - National Tax Journal
SN - 0028-0283
IS - 3
ER -