The Relationship between Large Fiscal Adjustments and Short-Term Output Growth Under Alternative Fiscal Policy Regimes

A small, but growing, body of literature searches for evidence of non-Keynesian effects of fiscal contractions. That is, some evidence exists that large fiscal contractions stimulate short-run economic activity. Our paper continues this research effort by systematically examining the effects, if any, of unusual fiscal events - either non-Keynesian results within a Keynesian model or Keynesian results within a neoclassical model -- on short-run economic activity. We examine this issue within three separate models -- a St. Louis equation, a Hall-type consumption equation, and a growth accounting equation. Our empirical findings are mixed, and do not provide strong systematic support for the view that unusually large fiscal contractions/expansions reverse the effects of normal fiscal events. Moreover, we find only limited evidence that trigger points are empirically important.

Breaking Points: Mutiny in the Continental Army

The mutinies of the Continental Army during the American Revolution threatened both the integrity of the army and the viability of the Revolution itself. They were complex phenomena, stemming from numerous underlying physical and psychological causes. Having slowly developed over the course of the war, the problems confronting the Continental Army eventually brought it to the breaking point. No less than four major mutinies, involving soldiers or officers, occurred between 1780-1783. This essay focuses on the reasons for the mutinies and how the participants justified their actions. It also examines responses from General Washington and other senior officers, and what effects these actions had on the army. Finally, this essay addresses the question of why so few major mutinies occurred given the miserable state of the Continental Army.