Deficit Reduction
What Pain, what Gain?
Description:... In Canada's current economic and fiscal circumstances, the need for a study on the economics of deficit reduction needs little elaboration. After a quarter-century of intensifying fiscal excess, Canadian governments are coming to the realization that control of public debt is the make-or-break public policy issue of the second half of the 1990s. This document looks at deficit reduction. Topics covered are: debating deficit reduction; the distortionary effect of rising taxes; Ricardian equivalence; government deficits; government deficits, debt, and the business cycle; the macroeconomics of government budget cuts; government debt and deficits in Canada; and, debt reduction with distorting taxes and incomplete Ricardianism.
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