The reflection of the federal budget deficit on the economic cycle in the United States of America

Abstract EN

 
In its report presented by the US Congress in January 2021, in which it explained that the American economy is going through a worrisome recession and that the real financial situation of the United States of America is worrisome, so the researcher's interest was to what extent the federal budget deficit affects the American economic recession? The World Bank data were relied upon, and a multiple regression model was used using EVIEWS to demonstrate the extent of this effect.

It has been shown that the federal budget deficit affects by 70.6% , and the inability of the federal government to restore the financial balance may directly reduce the confidence of businessmen and consumers, which discourages investment, which exacerbates the financial imbalances, and the government debt may not shows its negative effects in the short term, but it is a long-term threat.

Therefore, the research recommended that there is an urgent need to reduce the federal budget deficit rate, which requires there to be coordination between monetary policy and fiscal policy.

The goal of increasing economic growth can be achieved by using the deficit financing policy without the occurrence of monetary problems due to the effect of competition and the occurrence of inflationary waves.