The U.S. Federal Debt Outlook: Reading the Tea Leaves

Author/Editor: Celasun, Oya ; Keim, Geoffrey
Publication Date: March 01, 2010
Electronic Access: Free Full text (PDF file size is 921KB).
Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary: We show that fiscal policies reflecting a primary balance response to higher debt in line with historic experience would significantly increase the likelihood of reaching the debt targets of the U.S. administration in the medium term. Deficits and debt are higher under current budgetary proposals and IMF projections for real activity and interest rates, which do not include a reaction of policies to rising primary deficits. Under the IMF staff's current economic projections, a primary fiscal adjustment of about 3.5 percent of GDP would be needed to achieve a debt level of about 70 percent of GDP in 2020.
Series: Working Paper No. 10/62
Subject(s): Budgets | Business cycles | Debt management | Economic forecasting | Fiscal policy | Fiscal sustainability | Public debt | Sovereign debt | United States

Author's Keyword(s): Public debt | fiscal sustainability | fan charts
Publication Date: March 01, 2010
Format: Paper
Stock No: WPIEA2010062 Pages: 17
Please address any questions about this title to