ABSTRACT
I have reported on a large number of occasions that properly measured, inflation-adjusted and cyclically adjusted public budget deficits have been associated with more rapid subsequent growth in real GNP or GDP and with reductions in unemployment.1 I have confirmed these findings repeatedly with time-series beginning in 1955 for the United States. I now have OECD historical data for 19 countries – Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, the Netherlands, Norway, Portugal, Spain, Sweden, the United Kingdom, and the United States – over the 26-year period from 1970 to 1995. The data are associated with Fiscal Positions and Business Cycles (OECD, 1997), from the Economics Department of OECD, Paris. I utilize these data to test and estimate more widely, with sets of pooled time-series and cross-section regressions, relations previously explored for the United States.
