Yes. Specifically, we find that recent spending and taxing policies of the government–if continued–violate the government's intertemporal budget constraint. As a result, government spending must be reduced and/or tax revenues must be increased. These conclusions are based on tests of whether government spending and revenue are cointegrated. In addition to examining real spending and revenue, we also normalize these variables by real GNP and population. For a growing economy, these normalized measures are perhaps more pertinent. We also test and find support for the hypothesis that deficits have become a problem only in recent years.

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We appreciate the financial support of the National Science Foundation and the U.S. Department of Education (via the National Center for the Analysis of Longitudinal Data in Education Research.) We are grateful to the introductory microeconomics professor and the large university that permitted us to randomly assign students to live and online versions of the same class. All errors are our own, and our results and conclusions do not necessarily reflect the views of the National Science Foundation, U.S. Department of Education, or the undisclosed university in question. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.