Skip to main content

1997 | Buch

Budget Deficits and Macroeconomic Policy

verfasst von: J. O. N. Perkins

Verlag: Palgrave Macmillan UK

insite
SUCHEN

Über dieses Buch

Discussions of macroeconomic policy often focus on changes in the budget deficit. A low budget deficit is one of the criteria for admission to the EMU. But some combinations of fiscal measures having a given effect on the budget deficit can have damaging effects on the principal macroeconomic objectives such as inflation and full employment, whereas other combinations will not. This is illustrated by using results from simulations for various OECD countries.

Inhaltsverzeichnis

Frontmatter
1. Introduction
Abstract
A great deal of discussion of macroeconomic policy in most countries recently has been expressed in terms of changes in the level of the budget deficit. Attention in the USA has been focused on the alleged need to bring down the budget deficit, and even to ‘balance the budget’. One of the principal criteria for entry into the proposed European Monetary Union is that a member should have a budget deficit no higher than a certain target ratio to its GDP, and keep it there, as well as holding down the existing level of its national debt to a certain ratio to GDP. In Britain, discussions of fiscal policy are generally centred around the target of a certain figure for the Public Sector Borrowing Requirement or ‘PSBR’. More recently attention seems to have been given primarily to the level of the PSBR in excess of government investment. (Less commonly, in order to avoid the erroneous though widespread practice of taking the sale of public sector assets as a budget credit, the term Public Sector Financing Requirement or ‘PSFR’ is sometimes used in Britain.)
J. O. N. Perkins
2. General Considerations
Abstract
This chapter outlines some general considerations relating to the running of budget deficits. In particular, it discusses whether there are any general criteria that can usefully be applied to decisions about the level of government borrowing, and the budget deficit.
J. O. N. Perkins
3. Effects on Real Output
Abstract
It would facilitate the setting of macroeconomic policy if one could generalise about the relative effects of each of the broad macroeconomic instruments on each macroeconomic objective. In the present context, it would be convenient to be able to say, for example, that government outlays generally have a more inflationary effect (at any rate for a given stimulus to real output or employment) than do tax cuts with the same effect on the budget balance; or that government outlays have a bigger upward effect on real output than a tax cut having the same effect on the budget balance.
J. O. N. Perkins
4. Effects on Employment and Unemployment
Abstract
It is insufficient for governments to consider only the effects of alternative fiscal measures upon total output (as indicated by real GDP or GNP). Quite apart from the difficulties of measuring real GDP or GNP accurately (perhaps especially that part of it produced by governments), there are more fundamental reasons why a government should be concerned with the effects on employment and unemployment of alternative combinations of fiscal measures, and not only with their effect on real GNP.
J. O. N. Perkins
5. Effects on Inflation
Abstract
In deciding on its macroeconomic measures, a government cannot reasonably consider only the relative effects of different measures on output and employment (or unemployment). Some account of the relative effects on inflation has to be taken, even though the prevailing rates of inflation have been much lower in recent years than over the preceding two or three decades, if only because of the risk of bringing about a recrudescence of high rates of inflation.
J. O. N. Perkins
6. Effects on National Net Wealth
Abstract
A third possible macroeconomic objective (in addition to those of holding down inflation and holding up real output or employment) may be termed ‘changes in the country’s net wealth’. That is to say, changes in its stock of useful productive capital plus or minus its net liabilities owed to or assets held in other countries. It is reasonable for a government to include this as one macroeconomic objective, for it measures the contribution of policy to determining how much the present generation is handing on to future generations by way of a larger stock of productive capital, net of debts owed to other countries (or plus assets held in other countries).
J. O. N. Perkins
7. The Relevance of the Setting of Monetary Policy and Exchange Rate Policy
Abstract
The effects on the various macroeconomic objectives of any given change in a government outlay or revenue item depend in part on the setting of monetary policy and the exchange rate policy that accompanies the change in the fiscal measures.
J. O. N. Perkins
8. Effects of Different Combinations of Fiscal Measures
Abstract
Previous chapters have considered, separately, some evidence relating to comparisons of the effects on various macroeconomic objectives of different types of taxation, and also of different types of government outlays. The present chapter draws these threads together by looking at the policy implications for various macroeconomic objectives of different combinations of various taxes with one another and also with various types of government outlays.
J. O. N. Perkins
9. Policy Conclusions
Abstract
Earlier chapters have argued that it is not helpful to look upon changes in the budget balance as indicators of the macroeconomic effects of fiscal policy changes, mainly because different outlays and revenues may have different effects on important macroeconomic targets for the same effect on the budget balance
J. O. N. Perkins
Backmatter
Metadaten
Titel
Budget Deficits and Macroeconomic Policy
verfasst von
J. O. N. Perkins
Copyright-Jahr
1997
Verlag
Palgrave Macmillan UK
Electronic ISBN
978-0-230-37328-0
Print ISBN
978-1-349-39737-2
DOI
https://doi.org/10.1057/9780230373280