US fiscal policy shocks trigger long-lasting economic dynamics, impacting all sectors.
The article explores how the US government finances its spending through taxes and debt. By analyzing different fiscal policies, the researchers found that various financial tools are used to manage debt. They discovered that when the government borrows money to fund its activities, it can have long-lasting effects on the economy. In the short term, different types of taxes and spending change in response to debt, but in the long term, all parts of the government's budget are involved in managing debt.