This article analyzes the early but crucial stages of the development of the cyclically adjusted budget estimate. The idea of balancing the budget over the cycle was first conceived in the 1930s by the economists of the Stockholm school. During and after World War II, it was reinterpreted and incorporated into the fiscal program of the American political coalition supporting the New Deal, especially by the Committee for Economic Development. In the 1960s, Keynesian economists associated with the Kennedy and Johnson administrations reformulated yet again the notion. Drawing on archival sources that have only recently become available, we develop an account of this history that differs substantially from earlier studies. We find that, despite the differing policy prescriptions, the changing terminology, and the rhetorical claims at each time, some common threads about the idea and use of the cyclically adjusted budget estimate exist.

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