The worries expressed by Alan Greenspan that the long run economic growth of the United States will fade away due to increasing burden of entitlements motivated us to empirically investigate the impact of entitlements of key macroeconomic variables. To examine this contemporary issue, we estimate a vector error-correction model to analyze the impact of entitlements on the price level, real output, and the long-term interest rate. The results show that a shock to entitlements leads to decrease in output and lends support to the assertion made by Alan Greenspan. Several robustness checks verify that the results remain unchanged qualitatively.
Syed, Ateeb Akhter Shah; Fatima, Kaneez; and Naseer, Riffat
"The Macroeconomic Impacts of Entitlements,"
The Hilltop Review: Vol. 12
, Article 5.
Available at: https://scholarworks.wmich.edu/hilltopreview/vol12/iss2/5