United States Fiscal Policy for Social Workers

U.S. fiscal policy is of interest to social workers as it concerns issues including structural racism, economic justice, and income inequality. U.S. fiscal policy refers to the role of the government in taxing and spending, the budget appropriations process, and public budgets (including federal and state revenue and spending). Federal revenue includes payroll and income taxes (personal and corporate). Federal outlays include discretionary and mandatory entitlement spending. There are a number of ongoing contentious debates about U.S. fiscal policy, including those involving the size and function of government, deficit financing and borrowing, inequality, and the redistribution of wealth in tax policies.

Deficit financing approaches and the Nigerian sector’s output

This study examined the effect of deficit financing on Sectorial Output in Nigeria from 1986–2020. The independent variable in the study is deficit financing measured by domestic debt, foreign debt, budget deficit, and Foreign exchange reserve while the dependent variable in the study is Sectorial Output measured by Manufacturing Sector and Services Sector Output. Accordingly, the two models support the ARDL Methodology since they reported mixed integration. The study found that domestic debt has a positive significant effect on Sectorial Output in Nigeria. More so, Foreign Debt has a negative insignificant effect on Manufacturing Sector Output. However, it has a significant effect on the Services Sector Output in Nigeria. Again, the study found that Budget Deficit exerted a positive significant effect on Manufacturing Sector Output. However, it exerted a negative insignificant effect on Services Sector Output. While Foreign Reserve exerted a negative insignificant effect on Manufacturing Sector Output, Foreign Reserve had mixed effects on Services Sector Output; such effect tends to be statistically significant only in the short run. Lastly, the both inflation rate and the interest rate have a mixed effect on Sectorial Output.

Impact of Budget Deficit Financing on Money Demand in Nigeria

The study empirically investigates the impact of budget deficit financing on money demand in Nigeria with an objective of finding the effect of budget deficit financing indicators such as external debt financing, domestic debt as well as debt servicing on money demand. The study is modeled using a framework of Keynesian theory of budget deficit financing and Richadian Equivalent hypothesis. The study adopted an auto redistributive lag model (ARDL) which shows the existence of long run relationship between money demand and indicators of financing budget deficit and ordinary Least Square. The general findings revealed that external source of financing budget deficit, internal source of financing budget deficit as well as debt servicing has a significant effect on money demand in the Nigerian context. Base on this findings, the study recommend that external and internal source of financing deficit should be encouraged for effective demand leading to economic stability reasons and not for political reasons and it should be properly channeled to productive sector of the economy that will enhance economic stability.

Effect of Deficit Financing on Economic Growth in Bangladesh: Cointegration and VECM Approach

Bangladesh has been encountering a budget deficit since 1972 because of a decrease in the source of income. This paper aims to examine the effect of budget deficit financing on economic growth in Bangladesh throughout 1981–2018. Using secondary data, the paper uses the cointegration test, vector error correction mechanism (VECM) and Granger causality test. Johansen’s cointegration test outcomes find that the study variables are cointegrated and subsequently have a long-run nexus among the variables. The study finds that in the long run, government domestic debt (GDD), government external debt (GEXD) and money supply (MS) affect positively economic growth (RGDP). The outcomes of the VECM approach express that in the short run, GDD, external debt and MS negatively affect economic growth. Also, short-run causality runs from the GDD, GEXD and MS to economic growth. The Granger causality test result shows unidirectional causal nexus running from GDD to RGDP, RGDP to external debt and GEXD to MS, and bidirectional causal nexus between MS and GDD in Bangladesh. The study suggests the governments should enhance moderate levels of domestic and external borrowing and uses it in productive and efficient ways to accelerate economic growth in Bangladesh.

SCIENTIFIC AND METHODOLOGICAL APPROACH TO ESTIMATING BUDGET IMBALANCES

The article focuses on the ambiguity of the economists’ scientific position to the state budget imbalancing. The understanding of the balanced state budget in terms of revenues and expenditures in accordance with the concept of «healthy finances» is substantiated. The shortcomings of the concept of «healthy finances» are revealed, in particular, the fact that the annual balancing of budget revenues and expenditures excludes or significantly reduces the possibility of countercyclical, stabilizing influence of the state fiscal policy. Attention is paid to the peculiarities of the concept of chronic budget deficit and the specifics of deficit financing of public expenditures within the concept of countercyclical regulation. At the same time, it is proved that budget’s balancing is a secondary problem according to the concept of functional finance. It has been found that budget deficits can have both positive and negative socio-economic effects, depending on the circumstances in which they are formed. The types of state budget deficit are identified and characterized, namely: nominal, real, operating, primary, actual, hidden, quasi-fiscal, aggregative, active, passive, perceived, structural, cyclic deficits. It is proved that the main task of the state is to balance it in order to balance revenues and expenditures of the state. The article considers the approach to estimating budget imbalance using Cauchy inequality and an algorithm for estimating budget imbalance is formed. It is proved that ensuring budget balance is possible in the following areas: improving the quality of planning of key budget indicators; expansion of the income base; budget expenditure optimization / sequestration; targeted financing; improving the efficiency of state property management, budget control; introduction of result-oriented budgeting and audit of the efficiency of the use of budget funds; improvement of intergovernmental relations; public debt management. The article develops a scientific and methodological approach to imbalances estimating, in particular the Consolidated Budget in terms of substantiating the limit value of the imbalance measure based on the application of Cauchy inequality, as well as determining the impact of dynamic changes in budget imbalance based on the method of chain substitutions. The advantages of this scientific and methodological approach are the ability to compare estimates of budget imbalances, which differ significantly in the amount of financial resources redistributed through the budget, because such estimates are relative, which eliminates the effect of budget scale. Keywords: budget system, budget, budget deficit, deficit financing, budget balance, imbalance assessment, countercyclical regulation of the economy. JEL Classіfіcatіon G18, H6 Formulas: 3; fig.: 1; tabl.: 1; bibl.: 10.

Is the Fiscal Deficit of ASEAN Alarming? Evidence from Fiscal Deficit Consequences and Contribution towards Sustainable Economic Growth

The Association of Southeast Asian Nations (ASEAN) has faced a persistent fiscal deficit for the last three decades. In the vast literature, a question is still arising: is ASEAN’s fiscal deficit alarming? This study explores the fiscal deficit with different perspectives to provide guidelines for policymakers to answer this question. For this purpose, we offer fiscal causal hypotheses estimates, including the contribution of Government expenditures (GEs) and Government revenues (GRs) towards sustainable economic growth; we then evaluated two additional deficit hypotheses, the impact of fiscal deficit and deficit financing on inflation. This empirical analysis covered annual financial data for the years 1990 to 2019 of ten member countries of ASEAN by applying panel econometric techniques, which include unit root Levin, Lin, and Chu (LLC) and Im, Pesaran, and Shin (IPS) tests; the panel autoregressive distributed lag (ARDL) model for cointegration; and the Dumitrescu–Hurlin (DH) test for causality. The findings revealed that government expenditures contribute more towards sustainable economic growth while government revenues are inversely related to growth in the long run. The DH causality test supported the fiscal synchronization hypothesis and current account targeting hypothesis in ASEAN. The interest rate is found as a moderator between fiscal and current account deficits. Furthermore, the findings showed that the fiscal deficit of ASEAN could generate inflation while relying on outstanding debt. Overall, our findings concluded that the fiscal deficit of ASEAN is alarming based on the behavior of government revenues, interest rate dynamics, political stability, and outstanding debt in deficit financing.

A Year of a Pandemic: the State of the Russian Budget System

In the first quarter of 2021 against the background of a slight recovery in economic activity and a continuing downward trend in real household incomes the RF consolidated budget revenues grew not only in nominal terms, but also in real terms compared to last year. The most active growth in real terms was demonstrated by tax revenues and VAT. Income taxes and social insurance payments related to the income of the population are significantly behind the rate of inflation. The formed positive trend in world oil prices, however, does not yet provide access to the level of last year’s oil and gas revenues of the federal budget. At the same time, the outstripping growth of non-oil and gas revenues, even with the increase in the total volume of federal budget expenditures above the rate of inflation, ensured the final positive balance of both the federal budget and the consolidated budget. In the first quarter of the year, spending on the national economy grew at a faster pace. The growth rate of social policy expenditures remains high. Sub-federal budget revenues also showed a pronounced upward trend, mainly due to federal transfers. There is a certain shift in emphasis from their non-target types to their target ones. Although the expenditures of the sub-federal budgets increased in real terms, the balance of the consolidated budgets remained positive. Nevertheless, in a number of regions, there is a budget deficit with a significant amount of deficit financing of expenditures. The values of the state subfederal debt decreased slightly, while the total amount of the country’s state internal debt increased significantly.

BUDGET DEFICIT AND FINANCING OF CRITICAL SERVICES

Approaches to the use of budget deficit in fiscal policy are clarified. It is concluded that the analysis of the deficit contained in the works of domestic scientists does not sufficiently take into account changes in the volume and structure of expenditures, as well as their effects on economic and financial development of the country. It is noted how as a result of the application of deficit financing mechanisms, it’s not only the expenditures on borrowing services that are growing. No less important are the costs of financing the repayment of accumulated debt. To cover them, it is not the state budget revenues that are used, but the funds received on the basis of placing additional borrowings or attracting resources by conducting operations with state assets. During the challenges of the COVID-19 pandemic, additional budget expenditures are directed mainly to the provision of critical services. The factors influencing the attraction of additional resources (in order to finance the budget deficit) are identified: access to capital markets, the level of profitability of government borrowing, the dynamics of macroeconomic indicators, the possibility of conducting operations with government assets. An important condition for financing the budget deficit is to prevent the destructive effects of such operations on the dynamics of macroeconomic and financial indicators of the country. In developed countries, keeping low interest rates has significantly reduced the negative effects of deficit-summing. It is concluded that maintaining high yields on government debt instruments in Ukraine increases the risks of such transactions. During the period of overcoming the consequences of the pandemic, it is advisable to revise the current fiscal rules and apply special measures to restore them after overcoming its consequences.

A Year of Covid-19: A Long Road to Recovery and Acceleration of Indonesia's Development

2020 is the year of Covid-19, Indonesia feels the enormity of this pandemic in various aspects of development. The Indonesian economy during the year slowed down to minus 5.3 percent in the second quarter of 2020 and in aggregate growth was minus 2.1 percent in 2020. The target of development planning in the National Medium Term Development Plan (Rencana Pembangunan Jangka Menengah/RPJMN) 2020-2024 was revised through the updating of the Government Work Plan (Rencana Kerja Pemerintah/RKP) in 2020, with the main priority of overcoming Covid-19. Then development began to be intensified in 2021 to pursue national priority targets that were abandoned due to Covid-19. The 2020 State Budget allocates around IDR 937.42 trillion for the prevention of Covid-19, including the accumulated APBD (Regional Revenue and Expenditure Budget) IDR 86.32 trillion, which makes the deficit financing for that year reach IDR 1,226.8 trillion. The Covid-19 pandemic control policy through Large-Scale Social Restrictions Policy (Pembatasan Sosial Berskala Besar/PSBB) has had ups and downs, especially when coupled with the new normal policy. The Policy for Limiting Micro-Community Activities (Pemberlakuan Pembatasan Kegiatan Masyarakat/PPKM) as a substitute for PSBB was implemented in early February and the parallel national vaccination program is expected to support accelerated development as outlined in the RKP 2021. In 2021, the Covid-19 pandemic is still high in the world, and the acceleration of development proclaimed by the government gets a stretch of road that extends to be traversed.