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Neutral fiscal policy is usually undertaken when an economy is in neither a recession nor an expansion. The amount of government deficit spending (the excess not financed by tax revenue ) is roughly the same as it has been on average over time, so no changes to it are occurring that would have an effect on the level of economic activity .
Fiscal space is the flexibility of a government in its spending choices, and, more generally, to the financial well-being of a government. [1] Peter Heller (2005) defined it “as room in a government’s budget that allows it to provide resources for a desired purpose without jeopardizing the sustainability of its financial position or the stability of the economy.” [2]
The fiscal theory states that if a government has an unsustainable fiscal policy, such that it will not be able to pay off its obligation in future out of tax revenue (it runs a persistent structural deficit), then it will pay them off via inflating the debt away. Thus, fiscal discipline, meaning a balanced budget over the course of the ...
The government forms a budget for the new fiscal year by taking the budget from the previous fiscal year as a base and makes only small changes to it. Top-down approach: The central financial authority (e.g. the Ministry of finance) sets boundaries to the budget and the government completes it. This approach originated in the 1990s as an ...
Thus, the transfer system can promote efficiency in the public sector and can level the field for intergovernmental competition. [2] The discussion of fiscal imbalance and equalisation was of particular importance in the drafting of the new Iraqi constitution. It was a sticking point for the drafting process—with the oil rich regions seeking ...
Various activities of the government are undertaken at different levels. To understand the assignment of responsibilities to the different levels of state, it can be beneficial to define, whether it is more useful to deal with problems at the local or the federal level.
To quantify the fiscal burden and to draw comparisons of different countries, the concept of "fiscal burden of government ratio" is used. Calculated according to certain methodologies, it basically means that the lower the score, the lower the involvement of the government in the economics of the country.
Financial instruments - the products which are traded in the financial markets are called financial instruments. Based on different requirements and credit seekers, the securities in the market also differ from each others. Financial institutions - financial institutions are acting as a mediator between the investors and borrowers. They provide ...