scholarly journals Modern monetary theory for the post-pandemic NHS: why budget deficits do not matter

2022 ◽  
Vol 28 (1) ◽  
pp. 37-46
Author(s):  
Jaideep J Pandit
Keyword(s):  
Monetary Theory ◽  
Budget Deficits ◽  
Budget Management ◽  
Mortgage Loans ◽  
Government Deficits ◽  
Recurrent Cost ◽  
Operating Theatres ◽  
Expenditure Reduction ◽  
New Perspective ◽  
Clinical Directors

NHS clinical directors are responsible for balancing departmental budgets, which can encompass staffing, equipment and operating theatres. As trust income is generally fixed, expenditure reduction is often attempted via recurrent cost improvement plans. In orthodox monetary theory, a departmental deficit contributes first to the hospital, then to the NHS, then to the national deficit. In the orthodox view, governments in deficit need to increase taxes and/or borrow money by issuing bonds (akin to mortgage loans), the interest on which is paid off for generations. Modern monetary theory offers a different perspective: government deficits do not matter as much as orthodox theory claims, if at all. This is because governments have the monopoly right to create the money in which the deficit is denominated (so do not ever need to borrow something that they can create). Therefore governments cannot default on debt in their own currency. Furthermore, government deficits equate to private surplus. This new perspective should influence microeconomic budget management at the clinical director level: the new emphasis being to deliver value and not just implement local savings to eliminate departmental deficits. This approach will become increasingly important in managing the huge surgical waiting lists that have accumulated during the COVID-19 pandemic.

scholarly journals Budget Deficits: Rhetoric and Reality

1989 ◽  
Vol 3 (2) ◽  
pp. 73-93 ◽  
Author(s):  
Robert Eisner
Keyword(s):  
Fiscal Policy ◽  
Public Goods ◽  
News Media ◽  
Empirical Data ◽  
Budget Deficit ◽  
Economic Problem ◽  
Budget Deficits ◽  
Relevant Model ◽  
Government Deficits ◽  
Economics Profession

Whatever the real or imagined ills of the economy, the news media, most politicians and a fair proportion of the economics profession are quick to point to the culprit: “the budget deficit.” No matter that few appear to know or care precisely what deficit they are talking about or how it is measured. No matter that few bother to explain in terms of a relevant model just how government deficits may be expected to impact the economy. No matter that few offer any empirical data to sustain their judgments. I believe there are serious problems with our fiscal policy. These relate to fundamental national priorities and the provision of public goods, now and for the future. But the current size of the federal deficit is not “our number one economic problem,” if indeed it is a problem at all.

scholarly journals Inflationary Impact of Funding Options for Budget Deficits in Nigeria

2021 ◽  
pp. 41-51
Author(s):  
Apinran Martins ◽  
Ogiji Patrick ◽  
Laniyan Chioma ◽  
Usman Nuruddeen
Keyword(s):  
Federal Government ◽  
Banking System ◽  
Optimal Choice ◽  
Budget Deficits ◽  
Government Bonds ◽  
Distributed Lag ◽  
Government Deficits ◽  
Long Run ◽  
The Government ◽  
The Impact

This paper investigates the inflationary impact of the various financing options for the federal government budget deficit which has accumulated overtime. Using Auto Regressive Distributed Lag (ARDL) methodology and quarterly data over the period 2000Q1 to 2017Q2, the study found significant relationship between inflation and the current financing options of the Government. Overall, the result of our ARDL model affirm that the impact of fiscal spending in Nigeria on inflation is captured more in the short-run since none of the variables is significant in the long-run. In addition, the use of Banking System Financing to fund government deficits has better potentials as the optimal choice because its impact on inflation is insignificant. Federal Government Bonds as a tool for financing budget deficits is also considered an optimal choice because though it causes inflation to rise by the second quarter, but its impact on inflation is expected to fizzle out in the long-run. Ways and Means Advances on the other hand, was shown to have the highest inflationary impact and as such, its use as a tool for financing government deficit should be discouraged. We, therefore, recommend a couple of appropriate policy options for financing budget deficits in Nigeria namely monetary financing and the issuance of federal government bonds. On the policy side, more efficient public expenditure management. Capital market, co-financing arrangements with pension funds and issuance of project-tied bonds, would be beneficial.

scholarly journals Government Deficits And The Public Debt: The Endless Controversy

2011 ◽  
Vol 1 (1) ◽  
pp. 22
Author(s):  
Frank J. Bonello
Keyword(s):  
Interest Rates ◽  
Federal Government ◽  
Public Debt ◽  
Relative Size ◽  
American People ◽  
Budget Deficits ◽  
Government Budget ◽  
The Public ◽  
Government Deficits ◽  
The One

No economic topic has attracted more attention during the 1980s than the size of Federal government budget deficits and the corresponding rapid rise in the public debt. Crowding out news regarding Third World debt problems, U.S. foreign trade deficits, and the break up of American Telephone and Telegraph, Federal government budget deficits have been blamed for everything from high interest rates to the deterioration in the moral fiber of the American people. Deficits and debt have also caused political reversal: historically free spending Democrats blaming Reagan deficits for a variety of economic ills while the conservative Republican president treats the deficit with benign neglect.The purpose of this paper is not to answer all of the questions that have been raised regarding the causes and consequences of government deficits and debt. The initial concern is instead with the facts and figures on the absolute and relative size of the Federal governments recent deficits and debt. Next certain measurement issues are addressed for there is a continuing debate regarding appropriate procedures for expressing the governments budgetary outcomes. The third and final section of the paper reviews some of the arguments, theoretical and empirical, on the relation between deficits and debt on the one hand and interest rates on the other. In each section the intent is to survey rather than to present new theoretical arguments or new empirical evidence.

scholarly journals Household’s Overindebtedness during the COVID-19 Crisis: The Role of Debt and Financial Literacy

Risks ◽  
2021 ◽  
Vol 9 (4) ◽  
pp. 62
Author(s):  
Łukasz Kurowski
Keyword(s):  
Financial Literacy ◽  
Multinomial Logistic Regression ◽  
Financial Education ◽  
Management Skills ◽  
Budget Management ◽  
Mortgage Loans ◽  
Consumer Loans ◽  
Personal Finances ◽  
The Face

The COVID-19 pandemic has shown how important it is to prepare one’s own financial budget for the unexpected loss of income. In this dimension, the financial education of the society plays an invaluable role. It allows us to account for events that may adversely affect personal finances in our budget management decisions. Therefore, the aim of the article is to check whether households with a higher level of financial and debt literacy have better management skills from the perspective of a household’s budget, which in the face of a crisis reduces the risk of individuals not paying their liabilities. Thus, at the turn of June and July 2020, we conducted surveys among 1300 Polish citizens. Using the multinomial logistic regression, we show that people with a higher financial and debt literacy are less affected by overindebtedness. During the crisis, people who have a higher debt literacy are better prepared to manage credit liabilities; in this situation, financial literacy is less important. In addition, the type of credit experience turned out to be significant. Respondents who have experience with consumer loans (potentially high-margin products) are more likely to have debt repayment problems than those with mortgage loans experiences.

scholarly journals Very Simple Mathematical Model of MMT (Modern Monetary Theory)

2021 ◽  
Vol 11 (3) ◽  
pp. 78
Author(s):  
Yasuhito Tanaka
Keyword(s):  
Technological Progress ◽  
Budget Deficit ◽  
Full Employment ◽  
Returns To Scale ◽  
Perfect Competition ◽  
Monetary Theory ◽  
Budget Deficits ◽  
Growing Economy ◽  
The One ◽  
Constant Returns To Scale

The purpose of this paper is to provide a concise theoretical and mathematical foundation for the major parts of the debate in the recently discussed school of economics called Modern Monetary Theory (MMT), while maintaining the basics of the neoclassical microeconomic framework, such as utility maximization of consumers using budget constraints and utility functions, and equilibrium of demand and supply of goods under perfect competition with constant returns to scale technology. By a two-periods overlapping generations (OLG) model in which the economy grows by technological progress, we will show that: 1) We need a budget deficit to achieve full employment with constant price when the economy grows by technological progress. This budget deficit should not be offset by future surplus; 2) A budget deficit that exceeds the level necessary to maintain full employment in a growing economy with constant price will cause inflation. A stable budget deficit is required to prevent further inflation; 3) A budget deficit that is insufficient to maintain full employment will cause a recession with involuntary unemployment. A budget deficit larger than the one necessary and sufficient to maintain full employment without a recession can overcome a recession caused by insufficient budget deficit and restore full employment. The deficit created to overcome the recession should not be offset by subsequent surpluses, since full employment can then be maintained through constant budget deficits.

scholarly journals Approaching Modern Monetary Theory with a Taylor Rule

Economies ◽  
2019 ◽  
Vol 7 (4) ◽  
pp. 97 ◽  
Author(s):  
Mattson ◽  
Pjesky
Keyword(s):  
Fiscal Policy ◽  
Federal Government ◽  
Federal Reserve ◽  
Historical Data ◽  
Taylor Rule ◽  
Monetary Theory ◽  
Budget Deficits ◽  
Inflation Stabilization ◽  
Dual Mandate

Considering the goals of Modern Monetary Theorists, this article examines inflation stabilization and employment maximization through a Taylor Rule for fiscal policy, similar to John Taylor’s foundational examination of the behavior of the Federal Reserve. If it is the role of the federal government to aid in the maintenance of the dual mandate of the Federal Reserve, then their behavior should follow a similar policy of setting an intermediate target of deficits relative to the maximum employment (the “Federal Job Guarantee”) and the inflation target. The paper will compare the historical data with the rule. When the predictions of the Deficit Rule are compared to historical data from 1965, we find that fiscal policy aligns with what the Deficit Rule predicts with two exceptions: the stagflation of the 1970s and the current increases in budget deficits.

scholarly journals Testing Keynesian Proposition And Ricardian Equivalence: More Evidence On The Debate

2011 ◽  
Vol 6 (5) ◽  
Author(s):  
George A. Vamvoukas ◽  
Vassilios N. Gargalas
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Budget Deficit ◽  
Cointegration Analysis ◽  
Ricardian Equivalence ◽  
Impulse Response Functions ◽  
Budget Deficits ◽  
Positive Effects ◽  
Government Deficits ◽  
Using Data

This paper takes its motives from recent literature concerning the debate on the Keynesian proposition and the Ricardian equivalence, using data of the Greek economy and applying cointegration analysis, Granger causality tests and impulse response functions (IRF). The aim of the econometric methodology is to derive robust results by means of using alternative quantitative techniques. The empirical analysis shows the existence of dynamic relationships between the budget deficit and the interest rate, indicating a two-way causality between deficits and interest rates. The findings of Granger tests and IRFs contradict the view of Ricardian equivalence that government deficits do not influence the behavior of interest rate. Experimenting with the four-variable system (R, D, Y, P), IRF results show that in the case of Greece the budget deficit positively affects the inflation rate. The evidence that budget deficits exert positive effects on interest rates and inflation is consistent with the rationale of the Keynesian proposition.

scholarly journals BRAZILIAN FINANCIAL CRISIS IN THE 1980S: HISTORICAL PRECEDENT OF AN ECONOMY GOVERNED BY FINANCIAL INTERESTS

2019 ◽  
Vol 23 (3) ◽  
Author(s):  
Fabiano Abranches Silva Dalto
Keyword(s):  
Public Sector ◽  
Financial Crisis ◽  
Interest Rates ◽  
Public Investment ◽  
Financial Instability ◽  
Budget Deficits ◽  
Government Deficits ◽  
External Adjustment ◽  
Financial Interests ◽  
Public Deficits

ABSTRACT Beyond representing coordination or government failures, the Brazilian financial crisis in the 1980s characterized the dominance of financial interests on public policies. This paper shows that such dominance began with the external debt negotiations in 1982, which put international creditors’ interest first. It argues that the imposed external adjustment - specially the exchange rates devaluation, public investment cuts and the hike in real interest rates - generated recession and financial instability (notoriously inflation), which would threat depreciating private wealth. Therefore, both the external adjustment and the private wealth protection only turned possible due to the increasing public deficits and debts - including by transferences of debt from private to public sector. The dominant perspective, found in the literature on the period, blaming government deficits and debts for the financial instability of the 1980s is wrong. Economists, even heterodox ones, still believe that Brazil’s financial crisis in the 1980s resulted from budget deficits and public debts. This paper shows, contrary to the dominant view, that once the public sector had to allow private wealth adjustment to the external conditions imposed by foreign creditors, public deficits were the only possible outcome in that conditions.

SREM observation of the interaction between the in-situ deposited Pd small particles and MgO cleavage surface

1986 ◽  
Vol 44 ◽  
pp. 382-383
Author(s):  
H.-J. Ou
Keyword(s):  
Electron Microscopy ◽  
Small Particle ◽  
Small Particles ◽  
Cleavage Surface ◽  
Metallic Particles ◽  
Microscopy Technique ◽  
Ceramic Surfaces ◽  
Reflection Electron Microscopy ◽  
New Perspective

The understanding of the interactions between the small metallic particles and ceramic surfaces has been studied by many catalyst scientists. We had developed Scanning Reflection Electron Microscopy technique to study surface structure of MgO hulk cleaved surface and the interaction with the small particle of metals. Resolutions of 10Å has shown the periodic array of surface atomic steps on MgO. The SREM observation of the interaction between the metallic particles and the surface may provide a new perspective on such processes.

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