Fiscal Stance, Fiscal Rules, and Public Debt Dynamics in the United States

Abstract

Public debt in the United States has continued to rise despite the implementation of various policy measures aimed at curbing its growth. The Autoregressive Distributed Lag (ARDL) and Dynamic Simulated ARDL models were used to examine the effect of fiscal stance and fiscal rules on the dynamics of US public debt. The findings reveal that while fiscal tightening is useful in reducing public debt accumulation, the adoption of fiscal rules may be unbeneficial for curtailing public debt, implying that discretion, rather than rules, may be more desirable for public debt management in the United States.