In the past economic policies in the industrialized nations have focused on the restoration of financial stability, control of government expenditures, reduction of fiscal deficits, and facilitation of the working of private markets for goods, services, and factors of production. Increasingly in the United States, macroeconomic policies will reflect the government's determination to deal effectively with the problem of the federal deficit. It is hoped that new policies will free savings which may be channeled into private investment to offset the initial dampening of demand that is bound to follow restraint in government expenditures. If the United States is successful in reducing its deficit, other countries are likely to experience declining interest rates, lower inflation, and softer demand in which to frame their macroeconomic policies. West Germany and Japan, for example, may grow slightly faster than the United States.
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