robert e hall and wage change policy

"Using a recursive empirical model of the real interest rate, GDP growth, and the primary government deficit in the U.S"


"..solve for the ergodic distribution of the debt/GDP ratio."

" If such a distribution exists"

" the government is satisfying its intertemporal budget constraint."


" One key finding"

"... historically fiscal policy  brings  a  high debt ratio back to its normal level of 0.35
 over the next  decade. "


looking forward:

"Forecasts of continuing increases in the ratio over the decade
 make the implicit assumption that fiscal policy has shifted dramatically."


 "In the variant of the model that matches the forecast, the government would not satisfy its intertemporal budget constraint if the policy was permanent. "

bob...what about policy induced nominal acceleration ?

"The willingness of investors to hold U.S. government debt implies a belief that the high-deficit policy is transitory."

and wage booms verboten !