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This  Fiscal Neighbors   Jiri Jonas and Cemile Sancak  PDF
version  Watch our video: Chipping Away at Debt  Canada and the
United States confronted growing budget deficits and public debt
but the results differed  PUBLIC debt has grown rapidly in many
advanced economies as a result of the recent severe global
downturn. Now those countries will have to undertake
unprecedented expenditure and tax (that is, fiscal) adjustments
to ensure debt sustainability. Earlier attempts at fiscal
adjustment provide important lessons to guide policymakers in
this effort. We look at efforts undertaken more than a decade
ago in Canada and the United States that provide lessons for
today’s issues.  Both nations faced growing fiscal deficits and
public debt in the 1980s, and the initial attempts to correct
them proved insufficient. As deficits and debt mounted in the
first half of the 1990s, both countries introduced adjustment
plans to restore debt sustainability.