The neoliberal shift in US fiscal policy from the 1980s to the 1990s

This chapter applies Denzau and North’s (1994) “Shared Mental Models” framework to examine the influence of neoliberal ideas in shaping deficit reduction in the US from Reagan to Clinton. We argue that distinct fiscal strategies pursued by the Reagan and Clinton administrations were informed by the distinct strands of the neoliberal shared mental model that each adopted. We further explore the influence of these mental models in providing the coalitional glue that brings like-minded actors together in support of common policy agendas and strategies. In that regard, we examine the mental models and associated coalitions that were involved in shaping deficit reduction agendas and strategies in the 1980s and 1990s.