Is the slowdown of stimulus going to drag the economy to lower GDP?

摘要

Yes. We do need a very large fiscal adjustment. At least 6 percent of the budget deficit is structural-that is, growth alone won't solve the problem. The research in this area has generally shown that fiscal adjustments that rely more on spending cuts tend to result in a better outcome than adjustments that focus on taxes. Yet there is no doubt that in the short term-the short term being the first few years of budget cutting-you will see a growth hit from a big budget adjustment. We are assuming that this takes about a point off GDP growth.