Over the last 50 years the impact of fiscal policy changes has been altered by the evolution of the economic framework. In recent years the impact of fiscal stimulus appears to be far less effective than many thought.
a. How might the state of the financial markets have influenced the response of the economy to the fiscal stimulus?
b. How might the growing globalization of capital markets have impacted the effectiveness of fiscal policy over the last 30 years?
c. How might the impact of fiscal stimulus been impacted by the expectations that the federal budget deficits associated with current stimulus efforts may be more permanent than some expected?
d. How might have the sovereign risk problems in Europe impacted perceptions of the path of U.S. deficits?
e. How might the Ricardian equivalence theme have impacted taxpayer assessments of future tax burdens and therefore saving and consumption behavior?