{
  "title": "Fiscal Deficits and Current Account Deficits",
  "publication": "IMF Working Papers, October 1, 2009",
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  "summary": "The effectiveness of recent fiscal stimulus packages significantly depends on the assumption of non-Ricardian savings behavior. We show that, under the same assumption, fiscal deficits can have worrisome implications if they turn out to be permanent.",
  "sections": [
    {
      "heading": "Summary",
      "content": "- The effectiveness of recent fiscal stimulus packages significantly depends on the assumption of non-Ricardian savings behavior.\n- Under the same assumption, permanent fiscal deficits can have worrisome implications:\n  - If they occur in large countries they significantly raise the world real interest rate.\n  - They cause a short run current account deterioration equal to around 50 percent of the fiscal deficit deterioration.\n  - The longer run current account deterioration equals almost 75 percent for a large economy such as the United States, and almost 100 percent for a small open economy."
    },
    {
      "heading": "Key Findings",
      "content": "- Short run response:\n  - Current account deterioration ≈ \"around 50 percent of the fiscal deficit deterioration.\"\n- Longer run responses:\n  - For a large economy (example: the United States): current account deterioration ≈ \"almost 75 percent.\"\n  - For a small open economy: current account deterioration ≈ \"almost 100 percent.\"\n- Global interest rate effects:\n  - Permanent fiscal deficits in large countries \"significantly raise the world real interest rate.\""
    },
    {
      "heading": "Analytical Context and Assumptions",
      "content": "- Core behavioral assumption: non-Ricardian savings behavior is required for significant fiscal stimulus effects and underlies the results on deficits and current accounts.\n- Paper type: IMF Working Paper examining interactions among fiscal deficits, current account balances, and real interest rates under the stated behavioral assumption.\n\n---\n\n Content in this bundle\n\n- 1. Manufacturers\n  - 1. Manufacturers (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - 1. Manufacturers (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/fiscal-deficits-and-current-account-deficits-23367"
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    "Authors: Michael Kumhof, Douglas Laxton",
    "Published: October 1, 2009",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451873849.001",
    "The effectiveness of recent fiscal stimulus packages significantly depends on the assumption of non-Ricardian savings behavior.",
    "Under the same assumption, permanent fiscal deficits can have worrisome implications:",
    "Short run response:",
    "Longer run responses:",
    "Global interest rate effects:",
    "Core behavioral assumption: non-Ricardian savings behavior is required for significant fiscal stimulus effects and underlies the results on deficits and current accounts.",
    "Paper type: IMF Working Paper examining interactions among fiscal deficits, current account balances, and real interest rates under the stated behavioral assumption.",
    "**1. Manufacturers**"
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