Comparing Alternative Methods of Adjusting US Federal Fiscal Deficits for Cyclical and Price Effects

In this working paper, Resident Scholar Neil H. Buchanan statistically tests six alternative
definitions of the federal budget deficit to determine if these definitions improve the results of
econometric studies that use the deficit as an exogenous variable. His objectives are (1) to
evaluate Robert Eisner’s conclusion that a price-adjusted deficit definition improves econometric
results and (2) to compare alternative measures of the deficit.