Tuesday, November 7th, 2017 2:28 pm

Balanced Budget Amendment

Question A: Amending the Constitution to require that the federal government end each fiscal year without a deficit would substantially reduce output variability in the United States.

Responses
 

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Responses weighted by each expert's confidence

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Question B: Amending the Constitution to require that the federal government end each fiscal year without a deficit would substantially lower the cost of borrowing for the federal government.

Responses
 

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Responses weighted by each expert's confidence

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Question A Participant Responses

Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Strongly Disagree 7
Bio/Vote History
         
Alesina Alberto Alesina Harvard Disagree 4
Bio/Vote History
         
Altonji Joseph Altonji Yale Strongly Disagree 7
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Strongly Disagree 9
Bio/Vote History
         
Autor David Autor MIT Uncertain 1
Bio/Vote History
         
Baicker Katherine Baicker Chicago Disagree 1
Bio/Vote History
         
Banerjee Abhijit Banerjee MIT Strongly Disagree 7
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Disagree 5
Bio/Vote History
         
Brunnermeier Markus Brunnermeier Princeton Did Not Answer
Bio/Vote History
         
Chetty Raj Chetty Stanford Did Not Answer
Bio/Vote History
         
Chevalier Judith Chevalier Yale Strongly Disagree 5
Bio/Vote History
         
Cutler David Cutler Harvard Did Not Answer
Bio/Vote History
         
Deaton Angus Deaton Princeton Agree 3
Bio/Vote History
         
Duffie Darrell Duffie Stanford Strongly Disagree 9
Fiscal measures (e.g. TARP) can and often do reduce the severity of recessions.
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Disagree 8
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Disagree 5
Bio/Vote History
         
Einav Liran Einav Stanford Disagree 2
Bio/Vote History
         
Fair Ray Fair Yale Strongly Disagree 10
Bio/Vote History
         
Finkelstein Amy Finkelstein MIT Strongly Disagree 6
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Strongly Disagree 5
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Strongly Disagree 10
Pistol. Foot. Bang.
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Disagree 7
is this a trick question?
Bio/Vote History
         
Hall Robert Hall Stanford Disagree 6
In principle, an optimizing government runs a deficit to smooth taxes when a recession occurs. That's no excuse for the current deficit.
Bio/Vote History
         
Hart Oliver Hart Harvard Strongly Disagree 10
Fiscal stimulus can be useful sometimes. Straight-jacketing the government is a mistake. Also I don't see how it would be enforced.
Bio/Vote History
         
Holmström Bengt Holmström MIT Disagree 4
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Did Not Answer
Bio/Vote History
         
Hoynes Hilary Hoynes Berkeley Strongly Disagree 9
Bio/Vote History
         
Judd Kenneth Judd Stanford Strongly Disagree 8
Eliminating countercyclical spending does not seem like a good idea for reducing output fluctuations.
Bio/Vote History
         
Kaplan Steven Kaplan Chicago Disagree 4
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Disagree 5
Bio/Vote History
         
Klenow Pete Klenow Stanford Strongly Disagree 8 Bio/Vote History
         
Levin Jonathan Levin Stanford Disagree 4
Bio/Vote History
         
Maskin Eric Maskin Harvard Disagree 7
Bio/Vote History
         
Nordhaus William Nordhaus Yale Strongly Disagree 9
Turning off automatic stabilizers increases volatility.
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Strongly Disagree 8
Bio/Vote History
         
Samuelson Larry Samuelson Yale Disagree 6
Requiring budget balance would upend current operating procedure, with effects too uncertain to predict reduced output variability.
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Strongly Disagree 8
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Strongly Disagree 7
Bio/Vote History
         
Shapiro Carl Shapiro Berkeley Strongly Disagree 8
Bio/Vote History
         
Shimer Robert Shimer Chicago Strongly Disagree 8
Arguably it would substantially increase output variability
Bio/Vote History
         
Thaler Richard Thaler Chicago Strongly Disagree 6
Bio/Vote History
         
Udry Christopher Udry Yale Strongly Disagree 2
Bio/Vote History
         

Question B Participant Responses

Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Disagree 5
There might be an effect on cost of borrowing, but unlikely to be "substantial".
Bio/Vote History
         
Alesina Alberto Alesina Harvard Uncertain 3
Bio/Vote History
         
Altonji Joseph Altonji Yale Strongly Agree 7
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Uncertain 3
Bio/Vote History
         
Autor David Autor MIT Uncertain 1
Bio/Vote History
         
Baicker Katherine Baicker Chicago Uncertain 1
Bio/Vote History
         
Banerjee Abhijit Banerjee MIT Strongly Disagree 7
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Agree 3
Bio/Vote History
         
Brunnermeier Markus Brunnermeier Princeton Did Not Answer
Bio/Vote History
         
Chetty Raj Chetty Stanford Did Not Answer
Bio/Vote History
         
Chevalier Judith Chevalier Yale Uncertain 3
Bio/Vote History
         
Cutler David Cutler Harvard Did Not Answer
Bio/Vote History
         
Deaton Angus Deaton Princeton Agree 6
Bio/Vote History
         
Duffie Darrell Duffie Stanford Uncertain 9
Starting with no debt, this would be true by definition (although it would be bad policy). Starting with a lot of debt, this could backfire.
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Disagree 7
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Disagree 5
Bio/Vote History
         
Einav Liran Einav Stanford Uncertain 1
Bio/Vote History
         
Fair Ray Fair Yale Agree 5
Bio/Vote History
         
Finkelstein Amy Finkelstein MIT Disagree 3
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Strongly Disagree 5
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Strongly Disagree 10
If we were dumb enough to force ourselves to cut spending/raise taxes in the middle of recessions, who’s to say world wouldn’t RAISE rates?
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Agree 1
seems mechanically true but could there be an effect on growth?
Bio/Vote History
         
Hall Robert Hall Stanford Agree 6
The gov is way down the path of disappearance of a market for its debt, with the highest peacetime deficit/GDP ever.
Bio/Vote History
         
Hart Oliver Hart Harvard Disagree 6
Suppose the government spends and borrows less. This might raise interest rates if consumers spend more to offset critical services.
Bio/Vote History
         
Holmström Bengt Holmström MIT Agree 6
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Did Not Answer
Bio/Vote History
         
Hoynes Hilary Hoynes Berkeley No Opinion
Bio/Vote History
         
Judd Kenneth Judd Stanford Disagree 8
Lenders care about the reputation of the borrower to pay its obligations, not deficits.
Bio/Vote History
         
Kaplan Steven Kaplan Chicago Uncertain 4
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Disagree 5
Bio/Vote History
         
Klenow Pete Klenow Stanford Disagree 3 Bio/Vote History
         
Levin Jonathan Levin Stanford Uncertain 4
A lot would depend on implementation.
Bio/Vote History
         
Maskin Eric Maskin Harvard Disagree 7
Bio/Vote History
         
Nordhaus William Nordhaus Yale Uncertain 6
Fiscal impact lowers interest rates, but turmoil impact would raise. Net impact unclear.
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Strongly Disagree 7
Bio/Vote History
         
Samuelson Larry Samuelson Yale Disagree 6
Excessive debt can drive up borrowing costs, but it is not clear that current costs are vastly higher than they would be with budget balance
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Uncertain 5
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Disagree 5
Bio/Vote History
         
Shapiro Carl Shapiro Berkeley Agree 6
Bio/Vote History
         
Shimer Robert Shimer Chicago Uncertain 5
Bio/Vote History
         
Thaler Richard Thaler Chicago Strongly Disagree 7
Better idea. Amend the constitution to require 6% growth, 2% inflation and full employment. And all 4 foot putts are gimmes.
Bio/Vote History
         
Udry Christopher Udry Yale No Opinion
Bio/Vote History
         

10 New Economic Experts join the IGM Panel


For the past two years, our expert panelists have been informing the public about the extent to which economists agree or disagree on important public policy issues. This week, we are delighted to announce that we are expanding the IGM Economic Experts Panel to add ten new distinguished economists. Like our other experts, these new panelists have impeccable qualifications to speak on public policy matters, and their names will be familiar to other economists and the media.

To give the public a broad sense of their views on policy issues, each new expert has responded to a selection of 16 statements that our panel had previously addressed. We chose these 16 statements, which cover a wide range of important policy areas, because the original panelists' responses to them were analyzed in a paper comparing the views of our economic experts with those of the American public. You can find that paper, by Paola Sapienza and Luigi Zingales, here. The paper, along with other analyses of the experts' views, was discussed during the American Economic Association annual meetings, and the video can be found here.

The new panelists' responses to these statements can be seen on their individual voting history pages. Our ten new economic experts are:

Abhijit Banerjee (MIT)
Markus K. Brunnermeier (Princeton)
Liran Einav (Stanford)
Amy Finkelstein (MIT)
Oliver Hart (Harvard)
Hilary Hoynes (Berkeley)
Steven N. Kaplan (Chicago)
Larry Samuelson (Yale)
Carl Shapiro (Berkeley)
Robert Shimer (Chicago)


Please note that, for the 16 previous topics on which these new panelists have voted, we left the charts showing the distribution of responses unchanged. Those charts reflect the responses that our original panelists gave at the time, and we have not altered them to reflect the views of the new experts.

We have also taken this opportunity to ask our original panelists whether they would vote differently on any of the statements we have asked about in the past. Several experts chose to highlight statements to which they would currently respond differently. In such cases, you will see this "revote" below the panelist's original vote. We think you will enjoy seeing examples of statements on which some experts have reconsidered.

As with the 16 previous statements voted on by new panelists, these "revote" responses are not reflected in the chart that we display showing the distribution of views for that topic: all the charts for previous questions reflect the distribution of views that the experts expressed when the statement was originally posed.

About the IGM Economic Experts Panel

This panel explores the extent to which economists agree or disagree on major public policy issues. To assess such beliefs we assembled this panel of expert economists. Statistics teaches that a sample of (say) 40 opinions will be adequate to reflect a broader population if the sample is representative of that population.

To that end, our panel was chosen to include distinguished experts with a keen interest in public policy from the major areas of economics, to be geographically diverse, and to include Democrats, Republicans and Independents as well as older and younger scholars. The panel members are all senior faculty at the most elite research universities in the United States. The panel includes Nobel Laureates, John Bates Clark Medalists, fellows of the Econometric society, past Presidents of both the American Economics Association and American Finance Association, past Democratic and Republican members of the President's Council of Economics, and past and current editors of the leading journals in the profession. This selection process has the advantage of not only providing a set of panelists whose names will be familiar to other economists and the media, but also delivers a group with impeccable qualifications to speak on public policy matters.

Finally, it is important to explain one aspect of our voting process. In some instances a panelist may neither agree nor disagree with a statement, and there can be two very different reasons for this. One case occurs when an economist is an expert on a topic and yet sees the evidence on the exact claim at hand as ambiguous. In such cases our panelists vote "uncertain". A second case relates to statements on topics so far removed from the economist's expertise that he or she feels unqualified to vote. In this case, our panelists vote "no opinion".

The Economic Experts Panel questions are emailed individually to the members of the panel, and each responds electronically at his or her convenience. Panelists may consult whatever resources they like before answering.

Members of the public are free to suggest questions (see link below), and the panelists suggest many themselves. Members of the IGM faculty are responsible for deciding the final version of each week’s question. We usually send a draft of the question to the panel in advance, and invite them to point out problems with the wording if they see any. In response, we typically receive a handful of suggested clarifications from individual experts. This process helps us to spot inconsistencies, and to reduce vagueness or problems of interpretation.

The panel data are copyrighted by the Initiative on Global Markets and are being analyzed for an article to appear in a leading peer-reviewed journal.

chicago booth