This paper simulates the impact in a calibrated small macroeconomic model of a policy that attempts to apply sufficient effective stimulus in a severe recession without increasing the government deficit or debt, or inflation. This stimuluswithout-debt policy has two components: (1) a large standard fiscal stimulus; (2) a non-standard monetary stimulus—a large transfer from the central bank to t...

The result of Benhabib, Schmitt-Grohé, and Uribe (2001) is powerful because it relies only on three rather natural conditions: the Fisher equation, the convex Taylor rule, and the lower bound of the nominal interest rate. Their result is striking because the paper reveals the peril of the active Taylor rule, which has been shown to implement the target in a stable manner under various condition...

In a recent compilation of lessons learned about decentralization, Roy Bahl (1999) highlighted three channels through which central interventions often undermine the discipline of a hard budget constraint for local governments. These are “deficit grants” to cover year-end deficits on local government budgets, direct central government coverage of shortfalls on specific items of expenditure, and...

The University of Pennsylvania Health System laid off 450 employees and eliminated a total of 1,100 positions on Tuesday, marking the most aggressive effort to date made by Chief Executive Officer William Kelley to balance the troubled system's budget. The cuts — which come almost entirely from the system's managerial infrastructure — represent a nine percent reduction in the total health servi...