Journal articles: 'Government budget deficits'

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Shabbir, Tayyeb, and Ayaz Ahmed. "Are Government Budget Deficits Inflationary? Evidence from Pakistan." Pakistan Development Review 33, no. 4II (December 1, 1994): 955–67. http://dx.doi.org/10.30541/v33i4iipp.955-967.

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In academia as well as policy-making institutions, there has been a long standing interest in analysing the phenomenon of inflation. Amongst the possible determinants of inflation, budget deficits may be one whose importance might have grown since the oil price hikes of 1973-74 and in 1979. For many a developing countries these increases in oil price have been responsible for the massive current account deficits as well as rapidly increasing domestic budget deficits of the last decade or so. During the 1980s, the budget deficit for Pakistan also grew rapidly reaching a record high of 8.6 percent of the G D P in 1987-88. Lately in the backdrop of the recent structural adjustment programmes, there has been much interest in determining the optimal size and the macro economic role of the budget deficits. However, despite its growing importance, the effects of budget deficits are not well understood.

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Bohn, Henning. "Budget deficits and government accounting." Carnegie-Rochester Conference Series on Public Policy 37 (December 1992): 1–83. http://dx.doi.org/10.1016/0167-2231(92)90001-y.

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Bohn, Henning. "Budget deficits and government accounting." Carnegie-Rochester Conference Series on Public Policy 37 (December 1992): 93–95. http://dx.doi.org/10.1016/0167-2231(92)90003-2.

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Alt, James E., and Robert C. Lowry. "Divided Government, Fiscal Institutions, and Budget Deficits: Evidence from the States." American Political Science Review 88, no. 4 (December 1994): 811–28. http://dx.doi.org/10.2307/2082709.

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Does partisan control of American state government have systematic effects on state spending and taxing levels? Does divided control affect the government's ability to make hard decisions? Do institutional rules like legal deficit carryover restrictions matter? Using a formal model of fiscal policy to guide empirical analysis of data covering the American states from 1968 to 1987, we conclude that (1) aggregate state budget totals are driven by different factors under Democrats and Republicans, the net result being that Democrats target spending (and taxes) to higher shares of state-level personal income; (2) divided government is less able to react to revenue shocks that lead to budget deficits, particularly where different parties control each chamber of the legislature; and (3) unified party governments with restricted ability to carry deficits into the next fiscal year (outside the South) have sharper reactions to negative revenue shocks than those without restrictions.

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Pandit, Jaideep J. "Modern monetary theory for the post-pandemic NHS: why budget deficits do not matter." British Journal of Healthcare Management 28, no. 1 (January 2, 2022): 37–46. http://dx.doi.org/10.12968/bjhc.2021.0087.

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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.

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Haan, Jakob de. "Democracy, Elections and Government Budget Deficits." German Economic Review 15, no. 1 (February 1, 2014): 131–42. http://dx.doi.org/10.1111/geer.12022.

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Abstract I review research on the relationship between democracy and government indebtedness. I first discuss whether the extent to which politicians use fiscal policy for reelection purposes is conditioned by a country’s experience with democracy. Political budget cycles are not confined to young democracies, but evidence suggests that in younger democracies such cycles are more likely and also stronger than in more mature democracies. Next, I discuss whether the use of fiscal policy by the incumbent increases his/her chances for reelection. Research discussed suggests that political parties in government benefit to some extent if fiscal policy turns expansionary before elections occur.

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Douglas, James W., and Ringa Raudla. "What Is the Remedy for State and Local Fiscal Squeeze During the COVID-19 Recession? More Debt, and That Is Okay." American Review of Public Administration 50, no. 6-7 (July 15, 2020): 584–89. http://dx.doi.org/10.1177/0275074020941717.

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The COVID-19 crisis is placing a tremendous fiscal squeeze on state and local governments in the United States. We argue that the federal government should increase its deficit to fill in the fiscal gap. In the absence of sufficient federal assistance, we recommend that states suspend their balanced budget rules and norms and run deficits in their operating budgets to maintain services and meet additional obligations due to the pandemic. A comparison with Eurozone countries shows that states have more than enough debt capacity to run short-term deficits to respond to the crisis.

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Wibowo, Muhammad Ghafur. "Twin Deficit Phenomena in the Two Government Eras in Indonesia." Jurnal Analisis Bisnis Ekonomi 18, no. 1 (May 17, 2020): 36–48. http://dx.doi.org/10.31603/bisnisekonomi.v18i1.2994.

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The aim of this study is to analyze the development of the budget deficit and current account deficit in Indonesia in the era of President SBY and President Jokowi and to compare between the two eras. This study also analyzes the relationship of twin deficits to the Gross Domestic Product (GDP) and the interest rate (r). The analytical tool used was independent t-test (for comparison) and Vector Auto-Regressive (VAR). The data used comes from the International Monetary Fund (IMF), 2004:Q1-2018: Q3. The result showed that the budget deficit was the same in the two eras of government, but the trade balance deficit in the era of President Jokowi was far higher than before. The budget deficit has a significant effect on the trade balance deficit but does not apply otherwise (no causality). Variable gross domestic product and interest rates significantly influence both types of deficits.

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Bonello, Frank J. "Government Deficits And The Public Debt: The Endless Controversy." Journal of Applied Business Research (JABR) 1, no. 1 (November 2, 2011): 22. http://dx.doi.org/10.19030/jabr.v1i1.6591.

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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.

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10

Potrafke, Niklas, Marina Riem, and Christoph Schinke. "Debt Brakes in the German States: Governments’ Rhetoric and Actions." German Economic Review 17, no. 2 (May 1, 2016): 253–75. http://dx.doi.org/10.1111/geer.12089.

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AbstractIn 2009, a new law on German debt brakes was passed: state governments are not allowed to run structural deficits after 2020. Consolidation strategies initiated between 2009 and 2020 influence if a state can comply with the debt brake in 2020. We describe to what extent government ideology predicts if state governments consolidate budgets and which fiscal adjustment path they choose. Attitudes toward budget consolidation, as expressed by politicians’ rhetoric in the public debate, differed among parties. Anecdotal evidence and descriptive statistics indicate that leftwing governments ran on average higher structural deficits than rightwing governments between 2010 and 2014. Primary deficits, however, hardly differed under leftwing and rightwing governments. Revenues of federal taxes were much higher than expected and facilitated budget consolidation. Leftwing governments did not need to run deficits to design generous budgets. It is conceivable that parties confirmed their identity by using expressive rhetoric, but responded to shifts in public opinion after the financial crisis and pursued more sustainable fiscal policies when in office.

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11

Nizar, Muhammad Afdi. "PENGARUH DEFISIT ANGGARAN TERHADAP DEFISIT TRANSAKSI BERJALAN DI INDONESIA." Kajian Ekonomi dan Keuangan 17, no. 1 (November 9, 2015): 31. http://dx.doi.org/10.31685/kek.v17i1.42.

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This study aims to determine the effect of budget deficits on the current accounts deficit in Indonesia during 1990 - 2012. Based on quarterly time series data and using VAR model, the results of this study indicate that: (i) a positive effect of the budget deficit on the current account deficit. In the period 1990 - 2012 the effect of budget deficits is relatively small and rapid (one quarter), while in the period 1990-1997 budget deficits had greater influence with a longer duration (a semester) on current accounts deficit, and (ii) the results of this study confirm and in line with the twin deficit hypothesis. Therefore, the government should take concrete steps to reduce imports of oil (fuel). Because of fuel imports potentially add to the current accounts deficit and also the amount of fuel subsidies (and deficit) in the state budget

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12

Tanaka, Yasuhito. "A Game-Theoretic Analysis of Fiscal Policy under Economic Growth from the Perspective of MMT: Toward a Neoclassical Basis of MMT." WSEAS TRANSACTIONS ON BUSINESS AND ECONOMICS 19 (March 3, 2022): 748–59. http://dx.doi.org/10.37394/23207.2022.19.66.

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We present a game-theoretic analysis of fiscal policy under economic growth from the perspective of MMT using a simple two-periods overlapping generations (OLG) model. We show the following results. 1) Sustained budget deficits are necessary to maintain full-employment under economic growth driven by population growth. 2) An excessive budget deficit triggers inflation, and after one period inflation full-employment is maintained by sustained budget deficits with constant price. 3) Insufficient government deficit causes involuntary unemployment, and we need extra budget deficit over its steady state value to recover full-employment. These budget deficits need not be, and must not be redeemed. Therefore, if it is institutionally and legally possible, they should be financed by seigniorage not by public debt.

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13

Suparjito, Suparjito, Julianus Johnny Sarungu, Albertus Magnus Soesilo, Bhimo Rizky Samudro, and Erni Ummi Hasanah. "The Effect of Government Consumption and Government Investment as Intervening Variables to Growth in Indonesia." Jurnal Ekonomi Pembangunan: Kajian Masalah Ekonomi dan Pembangunan 20, no. 2 (January 9, 2020): 193–207. http://dx.doi.org/10.23917/jep.v20i2.6822.

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Fiscal policy and monetary policy are the two macroeconomic policies used by the government and monetary authorities in order to create a stable economy. The budget deficit policy is one form of fiscal policy implemented by the government in order to realize a high level of economic growth, a controlled inflation rate and open up new job opportunities to reduce unemployment. The impact of the implementation of the budget deficit policy on the level of economic growth is a long debate. Neoclassical groups argue that the implementation of budget deficit policies is detrimental to the economy, as it lowers the rate of economic growth. Keynesian groups argue that the implementation of the budget deficit policy is very good for the economy, because it triggers the rate of economic growth by increasing the number of demand for goods and services through increased government spending. While the Richardian people argue that the implementation of budget deficit policy has no effect on the economy. The data used in this study is data from 1981-2014 which consists of budget deficit, government consumption, government investment and economic growth rate. The method of analysis in this research is using Partial Least Square-Path Modeling (PLS-PM) approach with SMART-PLS analysis tool which aims to analyze the direct and indirect influence of the implementation of budget deficit policy toward the level of economic growth through government consumption and government investment. The results show that the implementation of the budget deficit policy can increase economic growth through increased government investment spending. Keywords: budget deficits, government investment, government consumption, growth.

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14

Mwigeka, Samwel. "Do Budget Deficit Crowds Out Private Investment: A Case of Tanzanian Economy." International Journal of Business and Management 11, no. 6 (May 25, 2016): 183. http://dx.doi.org/10.5539/ijbm.v11n6p183.

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The existing high budget deficit in Tanzanian economy has created an immense concern among economic policy analysts. The study inspects whether budget deficits crowd out or crowd in private investment in Tanzania, using annual data for the period from 1970 to 2012. Using the Johansen cointegration test advocates there is at least one cointegration vector among these variables. Given such condition, the application vector error correction model (VEC) became inevitable as it presents additional and superior information in relation to other data production processes. The results indicate a close long–term connection between private investment, and other variables included in the study. Results suggest that budget deficits considerably crowds out private investment. The study advocates that government should readdress its fiscal policy that would support the private investors. The government should discourage high government expenditures and maintaining a low fiscal deficit also capital market should be used to finance budget deficit.

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15

Suhartoko, YB, Adji Pratikto Pratikto, and Indira Kirana. "RICARDIAN EQUIVALENCE IN INDONESIA." Jurnal Ekonomi Trisakti 2, no. 1 (April 18, 2022): 167–98. http://dx.doi.org/10.25105/jet.v2i1.13565.

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Expansionary Fiscal Policy in the form of Deficit Fiscal is still being debated due to differences in views regarding the effect of budget deficits. The Ricardian Equivalence disciple argues that Deficit Fiscal Policy has a neutral impact on consumption. In contrast, Non-Ricardians (Keynesian and Neoclassical) argue that Budget Deficit Policy affects Private Consumption. Government policies affect private consumption through deficit fiscal policies such as budget deficits, government spending, taxes, and government debt. This study analyzes the effect of the fiscal deficit on consumption and observes the existence of the Ricardian Equivalence View in Indonesia. The estimation model used is the Vector Error Correction Model (VECM) through IRF and VD testing with time series data from 1980-2018. The results showed that the Budget Deficit Policy had a significant positive effect on private consumption, where the Fiscal Deficit shock was responded positively by Private Consumption. So that the Ricardian view does not apply in Indonesia and is more inclined to the Keynesian view. The positive response continues in the long term permanently, where 58.42% of the variation in the formation of the Private Consumption indicator (in period 10), is a Budget Deficit.

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Mehdi, Safdari. "Relationship between Government Budget Deficits and Inflation in the Iran's Economy." Information Management and Business Review 2, no. 5 (May 15, 2011): 223–28. http://dx.doi.org/10.22610/imbr.v2i5.901.

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Government in the economy of a country is responsible for various duties and to do these tasks uses the budget and fiscal policy as a planning and control tools. Because the different goals of economic balance in macro level such as fixing prices and unemployment inhibit any economic program is the priority, so can the government is using funds that involve income and expenses of the government to direct economic in reaching their goals in macro level. In developing countries lacked the private sector are strong, the role of government and its dimensions are larger tasks. The basic aim of the paper is to analyze the Relationship between government budget deficits and inflation in the Iran's economy. According to the positive and significant coefficient of government budget deficit, if budget deficit change to one percent, the inflation rate will change to 1.82 percent.

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17

Sanusi, Gbenga Peter. "Macroeconomic Fundamentals and Budget Deficit Nexus: Evidence from a Developing Economy." Mediterranean Journal of Social Sciences 12, no. 4 (July 8, 2021): 152. http://dx.doi.org/10.36941/mjss-2021-0036.

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The increasing budget deficit of the Nigeria’s government in the past few decades with its attendance impact on the economy is worrisome. This study examines the impacts of macroeconomic fundamentals on Nigeria’s fiscal deficit. An error correction model was specified and estimated. In terms of sign and size, the result showed that, there is an inverse relationship between budget deficit and the external reserve. This implies that an increase in the external reserve, leads to a decrease in budget deficits. A unit increase in external reserves resulted in 12.4 percent fall in budget deficit. In contrast, however, national income and interest rate showed a positive relationship with budget deficit. Increase in income expands the potential and propensity to spend. Lenders are equally more disposed to lend to the government because of the presupposed economic prosperity. The lagged value of the error correction term has the expected inverse sign of -0.42, and highly significant. The negative value of the error correction model further supports the co-integration relationship among the variables. Thus, macroeconomic variables influence budget deficits. Economic policies which minimizes macroeconomic fluctuations is paramount in curbing the negative impacts of increasing government deficit in the economy. Received: 2 May 2021 / Accepted: 15 June 2021 / Published: 8 July 2021

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18

Kyer, Ben L., and Gary E. Maggs. "A Note on Government Budgets." American Economist 49, no. 2 (October 2005): 87–89. http://dx.doi.org/10.1177/056943450504900211.

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The standard pedagogical examination of government budgets includes the distinction between cyclical and structural deficits and surpluses and changes thereof. This paper extends the regular classroom analysis and graphically demonstrates that cyclical changes in the government budget can be decomposed and stated as the summation of the expenditure effect and the revenue effect.

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19

Eisner, Robert. "Budget Deficits: Rhetoric and Reality." Journal of Economic Perspectives 3, no. 2 (May 1, 1989): 73–93. http://dx.doi.org/10.1257/jep.3.2.73.

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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.

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Thomas, Lloyd B., and Ali Abderrezak. "Long-Term Interest Rates: The Role of Expected Budget Deficits." Public Finance Quarterly 16, no. 3 (July 1988): 341–56. http://dx.doi.org/10.1177/109114218801600306.

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A relatively simple loanable funds model is utilized to explain the 10-year government bond yield during 1970–86. In the reduced form equation, expected inflation, expected structural deficits as a percentage of GNP, output growth, and liquidity growth appear as exogenous variables. Using alternative measures of expected inflation and expected deficits, the regression results indicate a powerful effect of expected deficits on the 10-year government bond yield. The increase in expected deficits raised bond yields by some 180 basis points by early 1984, and the anticipation of deficit-reduction legislation accounts for about one-third of the decline in yields during 1985–86, according to the model. In alternative experiments, tests are conducted to see whether bond yields “Granger-cause” forthcoming deficits. Our findings are consistent with the view that agents are forward-looking and foresee the direction of major changes in structural deficits.

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Tanaka, Yasuhito. "Necessity of Budget Deficit Under Economic Growth in Monopolistic Competition." Economics and Business 36, no. 1 (January 1, 2022): 1–16. http://dx.doi.org/10.2478/eb-2022-0001.

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Abstract The aim of the paper is to show, using a simple two-period overlapping generations model in which goods are produced solely by labour in a monopolistically competitive industry, that a continuous budget deficit (including the interest payments on government bonds) is necessary to achieve and maintain full employment under economic growth driven by technological progress. Since the budget deficits must be continuous, it might be better if they were financed by seigniorage rather than government debt. Since the budget deficit due to the issuance of government bonds puts pressure on fiscal expenditures in the amount of interest payments, a budget deficit of the same size due to seigniorage is a more effective use of the budget. It will also be shown that to achieve full employment from a recession with involuntary unemployment the extra budget deficit is necessary.

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Karel, Khom Raj, and Suman Kharel. "Trade Deficit in Nepal: Relationship between Trade Deficit and Budget Deficits." Molung Educational Frontier 10 (December 31, 2020): 95–108. http://dx.doi.org/10.3126/mef.v10i0.34076.

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Nepal has bitter experiences of trade deficit; it has become the tradition of the country. The trade deficit of Nepal has been widening since the decades. The statistical data shows that around 80 percent of imports are from India and China. The growth trend of foreign trade has been increasing in different years after year with a huge amount of trade deficit. As the size of foreign trade increased the trade deficit of Nepal has-been increasing as well. The government of Nepal has been announcing the deficit budget. This study focused to analyze the trends of trade deficit of Nepal and observing the relations of trade deficit and budget deficit. Simple statistical tools are applied to analyze the trend and growth of foreign trade of Nepal and correlation and simple linear regression model has been used to examine the linkages between trade deficit and budget deficit of Nepal. The study has found a strong positive relationship between trade deficit and budget deficit of Nepal. As result, there is a significant impact of budget deficit on trade deficit. The finding of the regression analysis indicates that budget deficit is a significant predictor of trade deficit.

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23

Martins, Apinran, Ogiji Patrick, Laniyan Chioma, and Usman Nuruddeen. "Inflationary Impact of Funding Options for Budget Deficits in Nigeria." Sumerianz Journal of Economics and Finance, no. 41 (March 20, 2021): 41–51. http://dx.doi.org/10.47752/sjef.41.41.51.

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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.

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Reed, Michael, Reza Najarzadeh, and Seyedeh Zohreh Sadati. "Analyzing the Relationship between Budget Deficit, Current Account Deficit, and Government Debt Sustainability." Journal of WEI Business and Economics 8, no. 1 (December 28, 2019): 20–31. http://dx.doi.org/10.36739/jweibe.2019.v8.i1.15.

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The main purpose of this study is to determine the dynamic relationships between budget deficit, current account deficit, and government debt sustainability during 1974-2015 in the Iranian economy. We used a VAR model with Impulse Functions and Variance Decomposition in our dynamic analysis. The results show that there is a long-term stable relationship among the variables of the model suggesting that to improve the government debt sustainability it has to reduce the budget deficit and current account deficit. Since Iran's dependence on oil revenues is the underlying cause of the dependence of the variables on each other, the government needs to reduce the dependence of the current account and the state budget on oil revenues to reduce both types of deficits and government debt sustainability.

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Patty, Jancen Roland. "BUDGET FORECAST ERRORS AND BUDGET DEVIATION: FINANCIAL CAPABILITY INDEX AS MODERATING VARIABLE." Jurnal Tata Kelola & Akuntabilitas Keuangan Negara 5, no. 2 (December 26, 2019): 157. http://dx.doi.org/10.28986/jtaken.v5i2.353.

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The lack of accounting literature that links budget supervision or control with budget realization allows the author to conduct this study. In addition, the main issue of this study is the failure of the local government in planning, implementing and being responsible for the budget resulting in budget surpluses and deficits. Surplus and deficit prove the existence of the budget deviations. The cause of the budget deviation is a mistake in the budget forecast. Some cases of budget deficits in Indonesia prove this. Budget forecast errors have the potential to increase budget deviation due to the role of the financial capability index. The purpose of this study is to examine the role of financial capability index in influencing the relationship of budget forecast errors and budget deviation. The sample used local government in Indonesia between 2016 and 2018 through a purposive sampling technique. Analytical tools use STATA Version 15.1. The results of the study prove that budget forecast errors have a positive and significant effect on budget deviation, and the financial capability index has a positive effect on the relationship between budget forecast errors and budget deviation. Sensitivity testing and additional testing reinforced the initial testing of this study.

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Rana, Ebney Ayaj, and Abu N. M. Wahid. "Fiscal Deficit and Economic Growth in Bangladesh." American Economist 62, no. 1 (October 6, 2016): 31–42. http://dx.doi.org/10.1177/0569434516672778.

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The economy of Bangladesh is currently going through a period of continuous budget deficit. The present data suggest that the government budget deficit, on average, is nearly 5% of the country’s GDP. This has been true since the early 2000s. To finance this deficit, governments have been borrowing largely from domestic and foreign sources resulting in inflationary pressure on one hand, and crowding out of private investments on the other. During the same period, although the economy has grown steadily at a rate of more than 6%, this growth is less than the potential. This article presents an econometric study of the impact of government budget deficits on the economic growth of Bangladesh. We conduct a time-series analysis using ordinary least squares estimation, vector error correction model, and granger causality test. The findings suggest that the government budget deficit has statistically significant negative impact on economic growth in Bangladesh. Policy implications of our findings include reestablishing the rule of law, political stability in the country, restructuring tax structure, closing tax loopholes, and harmonizing fiscal policy with monetary policy to attract additional domestic and foreign investment.

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Chinedu Anthony Umeh, Chinedu Daniel Ochuba, and Ugochukwu Remigius Ihezie. "Impact of government budget deficits on public health sector output in Nigeria." World Journal of Advanced Research and Reviews 11, no. 2 (August 30, 2021): 350–64. http://dx.doi.org/10.30574/wjarr.2021.11.2.0403.

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The study examined the impact of government budget deficits on the public health sector output in Nigeria over a period of 1980 to 2018. The specifically study sought to: investigate the impact of government budget deficits affect the public health sector output in Nigeria, ascertain the impact of external borrowing on the public health sector output in Nigeria and evaluate the impact of domestic borrowing budget deficits financing on the public health sector output in Nigeria. The methods of data analysis range from argument dickey fuller unit root test, Johansen co-integration test and finally error correction method. The following results were the basic findings of the study: (1) government budget deficits have positive insignificant impact on public health sector output in Nigeria (t – statistics (0.5663) < t0.05 (1.684); (2) external borrowing of financing budget deficits has negative insignificant impact on Health sector output in Nigeria (t – statistics (-1.2746) < t0.05 (1.684) and (3) domestic borrowing of financing budget deficits has positive significant impact on Health sector output in Nigeria (t – statistics (2.1711) > t0.05 (1.684). This study concludes that the budget deficits of government have positive insignificant impact on Health sector output in Nigeria because more budget allocations are put in health recurrent government expenditure than health capital expenditure whereas health capital expenditure is the engine of growth in health sector output. The study recommended that the Federal Government should commence and continue to execute the National Health Act. Allocation’s map-out for the Basic Health Care Provision Fund (BHCPF) should be drawn directly from the National Health Act, which is not less than 1% of the Consolidated Revenue (CRF) Fund of the Federation and is to flow from the FG's share of revenue.

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Ostrosky, Anthony L. "Federal Government Budget Deficits and Interest Rates: Comment." Southern Economic Journal 56, no. 3 (January 1990): 802. http://dx.doi.org/10.2307/1059381.

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Cebula, Richard J. "Federal Government Budget Deficits and Interest Rates: Reply." Southern Economic Journal 56, no. 3 (January 1990): 804. http://dx.doi.org/10.2307/1059382.

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30

Day, A. Edward. "Federal Government Budget Deficits and Interest Rates: Comment." Southern Economic Journal 58, no. 3 (January 1992): 816. http://dx.doi.org/10.2307/1059847.

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Cebula, Richard J. "Federal Government Budget Deficits and Interest Rates: Reply." Southern Economic Journal 58, no. 3 (January 1992): 821. http://dx.doi.org/10.2307/1059848.

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Cebula, Richard J., Kimberly Bates, Louise Marks, and Allison Roth. "Financial-market effects of Federal Government budget deficits." Weltwirtschaftliches Archiv 124, no. 4 (December 1988): 729–33. http://dx.doi.org/10.1007/bf02707773.

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BORRELLI, STEPHEN A., and TERRY J. ROYED. "Government 'strength' and budget deficits in advanced democracies." European Journal of Political Research 28, no. 2 (September 1995): 225–60. http://dx.doi.org/10.1111/j.1475-6765.1995.tb00811.x.

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Zharku, Lutfi. "Irregular Receipts Leading to Budget Deficits in Kosovo." Baltic Journal of Real Estate Economics and Construction Management 6, no. 1 (August 25, 2018): 100–115. http://dx.doi.org/10.2478/bjreecm-2018-0008.

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Abstract The aim of the paper is to analyse the irregular budget receipts, their behaviour and impact on budget deficits in Kosovo. Since its independence, Kosovo has been engaging in large infrastructure projects based mainly on initially high cash balances and overestimation of revenue capacity, in particular of irregular receipts. This led to the creation of future liabilities and budget deficits, which had to be financed by public debt. Further, the politically motivated increase of wage and salary bill and social transfers increased the burden on budget deficit already caused by infrastructure projects. Thus, budget deficits became the lasting feature of Kosovo economy. All this was supported by a lack of legal infrastructure or fiscal rules for several years. There is extensive literature on the causes of budget deficit, its definition and measurement. The literature review method is adopted in the present study, and research is refined by including selected papers that contain empirical and theoretical studies on budget deficit. Therefore, special-purpose deficit, the so-called “regular” budget deficit, which considers only regular receipts and outlays, has been defined and measured in the present study. This analysis leads to the conclusion that irregular receipts used by the government to engage in large infrastructure projects and/or the politically motivated increase of wage and salary bill and social transfers lead to a budget deficit that has to be financed through public debt. This is a case study of Kosovo and research has been carried out using primary data drawn from Kosovo budget annual financial reports. The implications of the paper may be of high importance for policymakers as well as for academic issues. This is a unique approach to the issues of Kosovo budget deficit and irregular receipts.

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Mwigeka, Samwel. "Do Budget Deficit Crowds out Private Investment: A Case of Tanzanian Economy." American Journal of Trade and Policy 2, no. 1 (April 30, 2015): 11–18. http://dx.doi.org/10.18034/ajtp.v2i1.378.

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The existing high budget deficit in Tanzanian economy has created an immense concern among economic policy analysts. The study investigates whether budget deficits crowd out or crowd in private investment in Tanzania, using annual data covering the period from 1970 to 2012. Using the Johansen cointegration test suggests there is at least one cointegration vector among these variables. Under such circumstances, we employed a vector error correction model (VEC), since it offers more and better information compared to other data generation processes. The results point to a close long–term relationship between private investment, and other variables included in the study. Results suggest that budget deficits significantly crowds out private investment. These results substantiate the theoretical predictions and are also supported by previous studies. The paper recommends that government should redirect it fiscal policy that would favor the private investor by discouraging high government expenditure and maintaining a low fiscal deficit. Also, to avoid crowding out effect, capital market should be used to finance budget deficit. JEL Classifications Code: H6

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SALEH, ALI SALMAN, and CHARLES HARVIE. "THE BUDGET DEFICIT AND ECONOMIC PERFORMANCE: A SURVEY." Singapore Economic Review 50, no. 02 (October 2005): 211–43. http://dx.doi.org/10.1142/s0217590805001986.

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The relationship between budget deficits and macroeconomic variables (such as growth, interest rates, trade deficit, exchange rate, among others) represents one of the most widely debated topics among economists and policy makers in both developed and developing countries. However, the purpose of this paper is to review the extensive literature to such a relationship, concentrating on theoretical debates and empirical studies, in order to derive substantive conclusions, which can be beneficial in the macroeconomics area; policy analysis; or in terms of constructing or developing a macroeconomic model for analyzing the impact of budget deficits on macroeconomic variables. The majority of these studies regress a macroeconomic variable on the deficit variable. These studies are cross-country and utilize time series data. In general the key outcomes from the studies presented in this paper indicated that both the method of financing and the components of government expenditures could have different effects. Therefore, it is crucial for the government to distinguish between consumption and investment expenditures especially when the government is in the process of evaluating the impact of fiscal policy on private investment and output growth or in the process of cutting expenditures to reduce the fiscal imbalances in the country. Even though the overall results from the empirical literature with respect to the impact of public investment on private investment and growth are ambiguous, the bulk of the empirical studies find a significantly negative effect of public consumption expenditure on growth, while the effects of public investment expenditure (such as on education, healthcare) are found to be positive although less robust. The key findings from these studies is important in particular for developing countries to be aware of the importance of government investment expenditures in the area of education, healthcare, infrastructure to long-term economic growth and the benefits from which are an important contributor to welfare and well-being. The key outcome from all of the studies presented in this paper while investigating the relationship between the budget deficit and current account deficit showed strong evidence in both developed and developing countries towards supporting the Keynesian proposition (conventional view) which suggests that an increase in the budget deficit would induce domestic absorption and, hence import expansion, causing a current account deficit. The key findings from the empirical studies investigating the relationship between the budget deficit and interest rates indicated strong evidence towards supporting the Keynesian model of a significant and positive relationship between budget deficits and interest rates. The major outcomes from the empirical studies examining the relationship between budget deficits and inflation showed strong evidence that the budget deficit financed through monetization and a rising money supply could lead to inflation.

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Tanaka, Yasuhito. "On Accumulation of the Budget Deficit: Spirit of MMT Through Mathematical Analysis." Issues in Economics and Business 8, no. 1 (April 15, 2022): 19. http://dx.doi.org/10.5296/ieb.v8i1.19762.

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It is said that public finance must be balanced at least in the long run. According to the so-called MMT (Modern Money Theory or Modern Monetary Theory) approach, however, this is not true. It is often pointed out that MMT lacks the mathematical analysis used in ordinary economic discussions. The purpose of this paper is to present a brief theoretical and mathematical basis to the backbone of the MMT argument, while maintaining the basics of the neoclassical microeconomic framework, such as maximizing consumer utility through utility functions and budget constraints, and equilibrium between demand and supply of goods under perfect competition with constant returns to scale technology. Using a simple overlapping generations (OLG) model that includes economic growth due to technological progress, we present the following results. The budget deficit equals the increase in people's savings, and the accumulated budget deficit equals people's savings. The budget deficit is a cause and the savings is a consequence, not the other way around. Deficits are created by the government, which determines income, which determines savings. Deficits create savings, not savings finance deficits. Reducing the budget deficit will reduce savings, income, and consumption.

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Piasecki, Ryszard, and Erico Wulf Betancourt. "Chile Fiscal Policy Management." Comparative Economic Research. Central and Eastern Europe 16, no. 2 (August 17, 2013): 45–62. http://dx.doi.org/10.2478/cer-2013-0011.

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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.

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Jacobsen, Gorm. "Sustainable Government Debt: The Case Of Poland." International Business & Economics Research Journal (IBER) 13, no. 6 (October 31, 2014): 1383. http://dx.doi.org/10.19030/iber.v13i6.8928.

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Due to government budget deficits in many countries for decades, government debt has become a big problem for some of these countries. This problem accelerated further after the financial crises starting at the end of 2008, a crisis that led to a low and even negative economic growth for many countries. The first part of this article gives a standard theoretical discussion of what could be meant by sustainable government debt. At the end, there is an illustration with some figures for Poland where the conclusion seems to prove the need for a reduced government budget deficit to avoid a serious government debt problem in the future.

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Blais, André, Jiyoon Kim, and Martial Foucault. "Public Spending, Public Deficits and Government Coalitions." Political Studies 58, no. 5 (November 4, 2010): 829–46. http://dx.doi.org/10.1111/j.1467-9248.2010.00842.x.

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This study examines the relationship between types of government and level of public spending. There are two competing perspectives about the consequences of coalition governments for the size of public expenditures. The most common argument is that government spending increases under coalition governments, compared with one-party governments. Another line of thought contends that coalition governments are often stalled in the status quo due to the veto power of each member. Our analysis of public spending in 33 parliamentary democracies between 1972 and 2000 confirms the latter argument that coalition governments have a status quo bias. We find, particularly, that single-party governments are apt to modify the budget according to the current fiscal condition, which enables them to increase or decrease spending more flexibly. By contrast, coalition governments find it difficult not only to decrease spending under difficult fiscal conditions but also to increase it even under a more favorable context, because each member of the coalition has a veto power.

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Roubini, Nouriel, Jeffrey Sachs, Seppo Honkapohja, and Daniel Cohen. "Government Spending and Budget Deficits in the Industrial Countries." Economic Policy 4, no. 8 (April 1989): 99. http://dx.doi.org/10.2307/1344465.

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Haan, Jakob, and Dick Zelhorst. "Financial- market effects of Federal Government budget deficits: Comment." Weltwirtschaftliches Archiv 126, no. 2 (June 1990): 388–92. http://dx.doi.org/10.1007/bf02706366.

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Cebula, Richard J., Kimberly Bates‡, Louise Marks, and Allison Roth. "Financial- market effects of Federal Government budget deficits: reply." Weltwirtschaftliches Archiv 126, no. 2 (June 1990): 393–96. http://dx.doi.org/10.1007/bf02706367.

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Barro, Robert J. "The economic effects of budget deficits and government spending." Journal of Monetary Economics 20, no. 2 (September 1987): 191–93. http://dx.doi.org/10.1016/0304-3932(87)90013-4.

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Ghiglino, Christian, and Karl Shell. "The Economic Effects of Restrictions on Government Budget Deficits." Journal of Economic Theory 94, no. 1 (September 2000): 106–37. http://dx.doi.org/10.1006/jeth.1999.2628.

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Kaur, Karamjeet. "Measuring the Quality of Union Budgets: Need to Go beyond the Deficit Measures." Indian Journal of Public Administration 63, no. 2 (June 2017): 187–95. http://dx.doi.org/10.1177/0019556117699733.

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In the run-up to Union Budget 2016–2017, a major difference of opinion emerged within the Union Government over adherence to fiscal consolidation vis-à-vis maintaining adequate expenditure allocation for essential services, such as health, education and infrastructure development ( Business Standard, 2016). As the budget document was unveiled, it was clear from the deficit targets met (and sought to be met in the future) that the government did not deviate from its commitments towards fiscal consolidation. These deficit targets, however, provide limited understanding of the overall ‘quality’ of expenditure and receipts of the government. In order to comprehend the overall picture and quantify this qualitative aspect, there is a need to go beyond the conventional measures of deficit. This article discusses the concept, meaning and usage of the various measures of deficits in order to, first, highlight their limitations in understanding the overall quality of budgets and, second, make a case for creation of a ‘composite index’ to reflect the broad quality and composition of budgets. A modest attempt has also been made in this article to evaluate the Union Budgets of the recent years on the basis of one such index developed by Bhide and Panda (2002). Results provide concrete evidence of a discernible improvement in the quality of budgets in the past few years.

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Shehu, Maimuna M., and Ibrahim M. Adamu. "Determinants of Budget Deficit in Nigeria." Journal of International Business, Economics and Entrepreneurship 6, no. 1 (June 21, 2021): 1. http://dx.doi.org/10.24191/jibe.v6i1.14199.

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This paper investigates the factors governing the determination of budget deficit in Nigeria from 1981q1 through 2016q4. Our methodology is based on Johansen cointegration and Vector Error Correction model (VECM) approach. The result from the Johansen cointegration test suggests one cointegrating vector, which indicates the existence of a long run cointegrating relationship. Evidence from the long run and short run parameters suggest that exchange rate, interest rate and one year lag of budget deficit are the major determinants of budget deficit. Therefore, to achieve a realistic fiscal surplus, the government should determine a high level of accountability in its fiscal operations. In addition, any fiscal surplus should be channeled into productive investments to diversify the economy and reduce the likelihood of potential budget deficits.

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Schultze, Charles L. "Is There a Bias Toward Excess in U.S. Government Budgets or Deficits?" Journal of Economic Perspectives 6, no. 2 (May 1, 1992): 25–43. http://dx.doi.org/10.1257/jep.6.2.25.

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Do the political institutions of a majoritarian representative democracy, and in particular those of the United States, systematically produce either levels of public spending or budget deficits that are excessive? Should U.S. political institutions be altered by constitutional amendment to deal with these problems? I will start by examining the issue of public spending, and then turn to the question of budget deficits.

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El-Khoury, Gabi. "Arab government budgets: selected indicators." Contemporary Arab Affairs 10, no. 1 (January 1, 2017): 165–70. http://dx.doi.org/10.1080/17550912.2017.1280261.

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This statistical file is concerned with Arab government budgets as it assumes that the sharp drop in oil prices coupled with ongoing regional conflicts have caused significant deficits in the budgets of most Arab countries, especially Arab oil-exporting countries, where governments had to implement a wide range of fiscal reforms aiming at rationalizing public spending and enhancing public revenues. On the other hand, lower oil prices have eased pressures on public finance in Arab oil-importing countries, especially in light of the rising cost of energy subsidies. Yet, many of these countries had also to proceed with structural reforms to reduce fuel subsidies and control the budget. Tables 1 and 2 provide statements on government revenues and grants, including estimates of government revenues as a percentage of gross domestic product (GDP), while Tables 3–5 show hydrocarbon and tax revenues, including estimates of these revenues as a percentage of total public revenues. Tables 6 and 7 provide statements on government expenditures, including estimates of government expenditures as a percentage of GDP, while Tables 8 and 9 deal with the structure of expenditures, showing estimates of current and capital expenditures along with figures on the functional classification of current expenditures. Overall surplus/deficit figures for Arab government budgets along with projections of the general government fiscal balance are shown in Table 10.

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Uchenna Okoye, Lawrence, Alexander Ehimare Omankhanlen, Uchechukwu Emena Okorie, Johnson I. Okoh, and Ado Ahmed. "Persistence of fiscal deficits in Nigeria: examining the issues." Investment Management and Financial Innovations 16, no. 4 (December 2, 2019): 98–109. http://dx.doi.org/10.21511/imfi.16(4).2019.09.

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Due to a huge financing gap in many developing nations, governments use budget deficit to facilitate growth and development. However, deficit financing deepens the economic woes of these economies, leaving them in a vicious cycle of deficits. In Nigeria, for instance, fiscal deficits cause country’s bad performance and ranking both in global growth and development indicators. Thus, the use of fiscal deficit to enhance economic performance has proved to be futile and also has left bad economic consequences. Based on the econometric method of Autoregressive Distributed Lag, this study examines how selected macroeconomic indicators influence fiscal deficits in the budgetary policy of Nigeria. Historical data between 1981 and 2017 were used for the study. The study shows a significant positive effect of inflation, oil revenue, and lagged exchange rate on fiscal deficits. There is also evidence that external debt and current exchange rate decrease the level of fiscal deficits. However, the research did not prove robust evidence of fiscal deficit persistence. Government policy should target low level of inflation and exchange rate appreciation as well as the productive investment of oil revenues and economic diversification as the panacea for persistent use of fiscal deficits.

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Journal articles on the topic 'Government budget deficits'

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