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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 .
It suggests a deviation from an ideal state of fiscal balance, which might not be practically achievable or even desirable in a federal system. The use of VFA, therefore, avoids these implications and focuses more on the pragmatic aspects of fiscal federalism.
Macroeconomic data to support public finance economics are generally referred to as fiscal or government finance statistics (GFS). The Government Finance Statistics Manual 2001 (GFSM 2001) is the internationally accepted methodology for compiling fiscal data.
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 ...
The holy grail of macroeconomics is full employment along with price stability, which implies highly efficient use of resources while controlling price level. In the first place, Modern Monetary Theory (MMT) rejects the monetarist explanation virtually in toto, arguing that it is based on an incorrect view of actual operations of the Treasury, central bank, and commercial banking, and how they ...
Fiscal transparency includes public reporting on the past, present, and future state of public finances. Fiscal policies have critical impacts on economic, social and environmental outcomes in all countries at all levels of development. Fiscal transparency is sometimes used synonymously with budget transparency.
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]
Fiscal union is the integration of the fiscal policy of nations or states. In a fiscal union, decisions about the collection and expenditure of taxes are taken by common institutions, shared by the participating governments. A fiscal union does not imply the centralisation of spending and tax decisions at the supranational level.