An Overview of Fiscal and Public Debt Dynamics

Fiscal policy impact on inflation in the United States, 1939-2015 Impulse response of 1% of GDP rise in government spending on inflation; - identified by quarterly news of additional military spending in the US 1.0 0.8 Impulse Response for Inflation Impulse Response for Output 1.0 0.8 Percentage points 0.6 0.4 0.2 Percent 0.6 0.4 0.2 0.0 0.0 -0.2 -0.2 0 1 2 3 4 5 6 7 8 9 10 11 12 Quarters following the shock 0 1 2 3 4 5 6 7 8 9 10 11 12 Quarters following the shock (Source) IMF, 2023, Fiscal Monitor April 2023, Figure 2.10. 11

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