Franklin

From Deficit Delusion to the Fiscal Balance Rule [electronic resource]

Author/Creator:
International Monetary Fund
Publication:
Washington, D.C. : International Monetary Fund, 1989.
Format/Description:
Government document
Book
1 online resource (26 p.)
Series:
IMF eLibrary
IMF Working Papers
Status/Location:
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Local subjects:
Aggregate demand. (search)
Budget balance. (search)
Budget constraint. (search)
Budget constraints. (search)
Budget deficits. (search)
Consumption expenditure. (search)
Expenditure. (search)
Fiscal balance. (search)
Fiscal illusion. (search)
Fiscal policies. (search)
Fiscal policy. (search)
Fiscal policy rule. (search)
Government spending. (search)
Loose fiscal policy. (search)
Sustainable fiscal policy. (search)
Tax changes. (search)
Tax policy. (search)
Tax rates. (search)
Tax reform. (search)
Tax revenue. (search)
Taxation. (search)
Tight fiscal policy. (search)
United States. (search)
Summary:
Although the deficit is a useful construct for Keynesian analyses of fiscal policy, the deficit appears to be a less useful measure of fiscal policy within all but a restricted class of intertemporal neoclassical models. This paper suggests that the nature of deficits in a simple certainty model with nondistortionary policies, and the in settings with uncertain policy, distortionary policy, and liquidity constraints is, to a large extent, arbitrary. It then posits a more appropriate description of fiscal policy for the class of models in question, and proposes the economically meaningful “fiscal balance rule” as an alternative to the economically arbitrary “balanced budget rule” as a means of assessing whether fiscal policy is intergenerationally tight or loose.
Notes:
Description based on print version record.
Contributor:
International Monetary Fund
Other format:
Print Version:
ISBN:
1451971001:
9781451971002
ISSN:
1018-5941
Publisher Number:
10.5089/9781451971002.001
Access Restriction:
Restricted for use by site license.