scholarly journals SIX SIMPLE PROPOSITIONS ON BUDGET DEFICITS, PUBLIC DEBT AND MONEY

2019 ◽  
Vol 7 (7-12) ◽  
Author(s):  
Malcolm Sawyer
Keyword(s):  
Fiscal Policy ◽  
Public Debt ◽  
Full Employment ◽  
Public Investment ◽  
Foreign Debt ◽  
Government Expenditure ◽  
Golden Rule ◽  
Budget Deficits ◽  
Private Debt ◽  
The Government

The paper sets out and elaborates on six propositions on budget deficits, public debt and money which should inform debates on fiscal policy. The propositions are:Money availability is not a limitation on government expenditure as the central bank is able to provide any required finance. The key considerations should focus on the issues of the social desirability of the proposed expenditure and the eventual funding of the expenditure.Phrases such as ‘magic money tree’ are designed to confuse and mislead.Proposals such as people’s QE do not enable any stimulus which cannot be obtained from conventional fiscal policy and is anti-democratic putting expenditure decisions in the hands of unelected central bankers.The golden rule’ of public finance (borrowing only for public investment) suffers from the fallacy of treating government like a firm and is comparable to the ‘government is like a household’ fallacy.The target for budget position should be to secure full employment and capacity. Funds would be forthcoming to underpin such a position.Public debt should be judged sustainable (and not excessive) by reference to the level of debt which results from a budget position as forthcoming from proposition 5. Public debt is to be considered as less of an issue (when government can cover interest through taxation and through money creation) than private debt and foreign debt.

scholarly journals Deficit Financing’ or ‘Deficit-Reduction Financing?’ Debates in Contemporary Economics: Origins, Confusions and Clarity

2019 ◽  
Vol 32 (1) ◽  
pp. 67-78
Author(s):  
Ann Pettifor Ann Pettifor
Keyword(s):  
Fiscal Policy ◽  
Public Debt ◽  
Government Spending ◽  
Government Expenditure ◽  
National Income ◽  
Spare Capacity ◽  
Government Deficits ◽  
Deficit Reduction ◽  
The Government ◽  
Public Sector Deficit

The analysis of government deficits and public debt points to a fundamental error in contemporary economic discussions. It is not possible to assess the stance of fiscal policy from estimates of the public sector deficit. John Maynard Keynes’s macroeconomics and the empirical evidence discussed in this paper indicate that expansionary fiscal policy financed by loan issues will lead to growth in economic activity and employment. In an economy with spare capacity and idle resources, high government expenditure generates income, including tax revenues and thereby reduces the government deficit, and cuts public debt. The main purpose of increased loanfinanced government spending at times of private economic weakness is to increase the nation’s income. Keynes argued that any such government spending was not deficit spending, because he understood the spending as the most sensible means to cut the deficit. Deficit-reduction spending might be a more appropriate definition, because as he argued with Josiah Stamp: “You will never balance the budget through measures which reduce national income” (Keynes, 1978, vol. 21, p. 149).

scholarly journals Chile Fiscal Policy Management

2013 ◽  
Vol 16 (2) ◽  
pp. 45-62
Author(s):  
Ryszard Piasecki ◽  
Erico Wulf Betancourt
Keyword(s):  
Fiscal Policy ◽  
Public Debt ◽  
Budget Deficit ◽  
Budget Deficits ◽  
Policy Management ◽  
Total Revenue ◽  
The Public ◽  
The Government ◽  
Budget Surplus

A budget surplus arises in a country when the total revenue earnings surpass expenditures in a particular financial year. Having a budget surplus is very important in the sense that it brings about a decrease in the net public debt, while the public debt is increased in the event of a budget deficit. Both budget deficits and budget surpluses also exert indirect influences on taxpayers. Normally, it is not essential on the part of the government to maintain a budget surplus, though it needs to be very careful when running a budget deficit to have the proper buffer.  

Fiscal risks are low but rising in Turkey

2016 ◽  
Keyword(s):  
Fiscal Policy ◽  
Public Debt ◽  
Global Economy ◽  
Current Account Deficit ◽  
Private Investment ◽  
Fiscal Sustainability ◽  
Budget Deficits ◽  
Content Type ◽  
The Public ◽  
The Government

Subject Turkey's fiscal sustainability. Significance By keeping fiscal deficits low, the government has steadily reduced the public debt to about 33% of GDP. However, fiscal policy is now shoring up growth. There is also concern about the lack of further public financial reform, insufficient transparency and contingent liabilities. Impacts Wider budget deficits may not affect growth notably, given the weak global economy and low private investment and investor confidence. Turkey will have one of Europe's lowest public-debt levels, but investors may need to pay more attention to public finances. Fiscal policy could join more urgent worries about politics, the current-account deficit, private-sector debt and monetary policy.

scholarly journals Economic policy and confidence of economic agents – a causal relationship?

2020 ◽  
Vol 20 (4) ◽  
pp. 471-484
Author(s):  
Silvo Dajčman
Keyword(s):  
Fiscal Policy ◽  
Granger Causality ◽  
Government Spending ◽  
Government Expenditure ◽  
Policy Instruments ◽  
Consumer Confidence ◽  
Causality Analysis ◽  
Economic Agents ◽  
Business Confidence ◽  
The Government

AbstractThe purpose of this paper is to study whether innovations in monetary and fiscal policy are a leading indicator of future business and consumer confidence and reverse applying the panel Granger causality analysis to two periods in the history of the euro area: before and after the start of the Great Recession. The results show that Granger causality interaction between the confidence of economic agents and the stance of monetary policy (measured by the shadow rate) is stronger than between the former and the fiscal policy instruments. The European Central Bank (ECB) shadow rate innovations Granger caused business and consumer confidence in both periods, but also indicators of confidence Granger caused the shadow rate. No such feedback could be established between two fiscal policy instruments (government expenditure and revenue growth) and the indicators of confidence. Government spending and revenues Granger caused business confidence in the first subperiod, but not in the second subperiod when the causality reversed. The government revenues Granger caused consumer confidence in the first subperiod, while government expenditures in the second subperiod. Consumer confidence Granger caused government spending in the first subperiod.

scholarly journals Impact of Public Debt, Deficit and Debt Financing on Private Investment in a Large Country: Evidence from the United States

2020 ◽  
Vol 6 (2) ◽  
pp. 139-161
Author(s):  
Amir Kia
Keyword(s):  
Public Debt ◽  
Public Investment ◽  
Government Expenditure ◽  
Private Investment ◽  
Adjustment Costs ◽  
The United States ◽  
Direct Impact ◽  
Large Country ◽  
Long Run ◽  
Short Run

This paper analyses the direct impact of fiscal variables on private investment. The current literature ignores one or more fiscal variables and, in many cases, the foreign financing of debt. In this paper, an aggregate investment function for an economy in which firms incur adjustment costs in their investment process is developed. The developed model incorporates the direct impact of government expenditure, public debt and investment, deficits and foreign-financed debt on private investment. The model is tested on US data. It is found that public investment does not have any impact on private investment, but government expenditure, deficit, debt and foreign-financed debt crowd out private investment over the long run. However, deficit crowds in the private investment over the short run.

scholarly journals PUBLIC DEBT AS A SOURCE OF FINANCING FOR GOVERNMENT EXPENDITURES IN THE PERSPECTIVE OF ISLAMIC SCHOLARS

2019 ◽  
Vol 7 (4) ◽  
pp. 285-290
Author(s):  
Imron Mawardi ◽  
Tika Widiastuti ◽  
Debrina Farrah Anova ◽  
Muhammad Ubaidillah Al Mustofa ◽  
Dewie Saktia Ardiantono ◽  
...  
Keyword(s):  
Public Debt ◽  
Foreign Debt ◽  
General Knowledge ◽  
The Public ◽  
Islamic Perspective ◽  
External Sources ◽  
Internal Sources ◽  
The Government ◽  
State Projects ◽  
Conceptual Research

Purpose of the study: This study aims to examine foreign debt as a source of financing for economic development. This research is expected to provide (1) an overview of debt as a source of funding for state projects, (2) investigate its impacts and (3) offer additional knowledge of its Islamic perspective. Methodology: This research is a qualitative study using the study literature approach. This research is conducted by analysing books, literature, journals, and magazines with themes related to the focus of the discussion on this study. It is expected that the method used can provide insight, general knowledge, and develop the view of Islam in relation to foreign debt. Main Findings: The government has to ensure that the state has the ability to pay off its obligations in the future; guarantee that loans have to be free from interest; prioritize taking loans from internal sources rather than external sources. In Addition, debts are not intended for deferred needs and not taking loans that exceed their needs. Applications of this study: basically the results of this study can be applied to any country that considers the use of public debt, like other Islamic systems. Novelty/Originality of this study: This research is conceptual research in an Islamic perspective. This study successfully examined comprehensively related to the public debt with the Islamic approach.

IMF will worry about Cairo's debt burden later

2017 ◽  
Keyword(s):  
Interest Rate ◽  
Public Debt ◽  
Government Expenditure ◽  
Fiscal Year ◽  
Indirect Taxation ◽  
Content Type ◽  
The Public ◽  
Debt Burden ◽  
The Government ◽  
Domestic Interest Rate

Significance The review will take into account the effects of measures taken thus far, in particular the flotation of the Egyptian pound, and will assess the government’s budget for the 2017-18 (July-June) fiscal year. Impacts The government will struggle to reduce the deficit because of the scale of public debt and the record high domestic interest rate. Government expenditure on wages will rise at a much lower rate than inflation. The public will also face further rises in indirect taxation, revenue from which is projected to rise by 40%. The IMF is unlikely to raise any serious objections to the government’s plans.

scholarly journals The Macroeconomic Effects of Exogenous Fiscal Policy Shocks in Germany: A Disaggregated SVAR Analysis

2010 ◽  
Vol 230 (3) ◽  
Author(s):  
Jörn Tenhofen ◽  
Guntram B. Wolff ◽  
Kirsten H. Heppke-Falk
Keyword(s):  
Fiscal Policy ◽  
Public Investment ◽  
Government Expenditure ◽  
German Economy ◽  
Public Employees ◽  
Positive Effects ◽  
Long Run ◽  
Policy Shocks ◽  
Net Revenue ◽  
Direct Government

SummaryWe investigate the effects of fiscal policy shocks on the German economy extending the SVAR approach of Blanchard and Perotti (2002). Direct government expenditure shocks are found to increase output and private consumption on impact. The output multiplier is smaller than one and is falling rather quickly reaching zero after 3 years. Government operating expenditure has size able positive effects on output, in the long run in particular due to public capital formation. Compensation of public employees is not effective in stimulating the economy.Government net revenue shocks do not affect output significantly. Indirect taxes have little effects, while direct taxes lower output significantly. Overall, the effects of fiscal policy are short-lived with the exception of public investment increases.

The macroeconomic effects of fiscal consolidation policies in Greece

2017 ◽  
Vol 9 (1) ◽  
pp. 34-49 ◽  
Author(s):  
Stephanos Papadamou ◽  
Trifon Tzivinikos
Keyword(s):  
Fiscal Policy ◽  
Public Debt ◽  
Wage Policy ◽  
Government Consumption ◽  
Content Type ◽  
Indirect Taxes ◽  
Debt Dynamics ◽  
Policy Shocks ◽  
The Government ◽  
A Minor

Purpose This paper aims to investigate the effects of contractionary fiscal policy shocks on major Greek macroeconomic variables within a structural vector autoregression framework while accounting for debt dynamics. Design/methodology/approach The sign restriction approach is applied to identify a linear combination of government spending and government revenue shock simultaneously while accounting for debt dynamics. Additionally, output and unemployment responses to fiscal shocks under different scenarios concerning the amalgamation of austerity measures are considered. Findings The results indicate that a contractionary consumption policy shock, namely, a 1 per cent decrease in government consumption and a 1 per cent increase in indirect taxes, is preferred, as it produces a minor decrease in output and substantially decreases public debt, while a contractionary wage policy shock is suitable only when the government aims to sharply reduce public debt, as the consequences for the economy are harsh. A contractionary investment policy shock is not recommended, as it triggers a rise in unemployment and a fall in output, while the effect on the public debt is minor. Practical implications Policymakers should focus their efforts on reducing unproductive government consumption on the expenditure side. Concerning revenues, the reinforcement of tax administration is recommended to ensure that indirect taxes will be collected. Originality/value This paper contributes to the existing literature by providing a disaggregated analysis of the effects of fiscal policy actions in Greece by implementing several fiscal policy scenarios and accounting for the level of public debt. All scenarios are in the vein of the economic adjustment programs guidelines.

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