I have just updated my slides on my talk on The Budget and Macroeconomic Policy. They are now current as of November 2013...
The talk is the product of an invitation by Berkeley Goldman School of Public Policy Professor John Ellwood to come to his budgeting class to discuss the budget deficit and the economy at an introductory level. It was a good opportunity to try to pull together my thoughts about how to successfully teach this vitally-important topic at a generally-accessible level.
I framed it as:
- The government’s deficit (or surplus) affects the macroeconomy in three “runs”.
- In the short run, a government deficit can serve as a valuable tool to rebalance the economy in a depression if interest rates are very very low.
- In the medium run, a government surplus crowds in investment and boosts the rate of growth.
- In the long run a government that does not or cannot pay its bills gets into a world of hurt.
Although the slides are updated to November 2013, the transcript is still from the February 21, 2012 Berkeley GGSPP lecture...