Q: But wouldn’t a federal budget be the ideal solution? A: A federal solution would require a huge leap forward at the institutional level.
But, when it is used imprudently and in excess, the result can be disaster.” The question then naturally arises: How much is “just right”, to say it in the words of Goldilocks? Cecchetti, Mohanty and Zampolli 4 come up with concrete numbers. They find that when household debt goes beyond 85% of GDP, it becomes a drag on growth.