Fiscal Policy

8.

Government Budgets, Deficits, and Debt

8.1.

The Government Budget

8.1.1.

Structure of the Budget

8.1.1.1.

Revenue Sources

8.1.1.2.

Expenditure Categories

8.1.1.3.

8.1.2.

8.1.2.1.

Conditions for Surplus

8.1.2.2.

Economic Effects

8.1.3.

8.1.3.1.

Causes of Deficits

8.1.3.2.

Financing Methods

8.1.4.

Balanced Budget

8.1.4.1.

Constitutional Requirements

8.1.4.2.

Economic Arguments

8.1.5.

Cyclical vs. Structural Deficits

8.1.5.1.

Automatic Stabilizer Effects

8.1.5.2.

Underlying Fiscal Position

8.1.5.3.

Measurement Challenges

8.2.

8.2.1.

8.2.1.1.

Accumulation of Past Deficits

8.2.1.2.

Government Securities

8.2.2.

8.2.2.1.

Debt-to-GDP Ratio

8.2.2.2.

Gross vs. Net Debt

8.2.2.3.

Present Value Calculations

8.2.3.

Domestic vs. Foreign Debt

8.2.3.1.

Ownership Patterns

8.2.3.2.

Economic Implications

8.2.4.

Types of Government Securities

8.2.4.1.

8.2.4.2.

8.2.4.3.

8.3.

The Economics of Deficits and Debt

8.3.1.

Short-Term Consequences

8.3.1.1.

Stimulating Demand

8.3.1.2.

Financing Government Operations

8.3.1.3.

Interest Rate Effects

8.3.2.

Long-Term Consequences

8.3.2.1.

Interest Payments

8.3.2.2.

Debt Service Burden

8.3.2.3.

Potential for Default

8.3.2.4.

Impact on Future Generations

8.3.3.

Debt Sustainability

8.3.3.1.

Criteria for Sustainability

8.3.3.2.

8.3.3.3.

Fiscal Rules and Limits

8.3.3.4.

Primary Balance Requirements

8.3.4.

Intergenerational Equity

8.3.4.1.

Burden on Future Taxpayers

8.3.4.2.

Policy Considerations

8.3.4.3.

Generational Accounting

8.4.

Debt Crises and Management

8.4.1.

Sovereign Debt Crises

8.4.2.

Debt Restructuring

8.4.3.

International Assistance

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7. Challenges and Limitations of Fiscal Policy

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9. Fiscal Policy in a Global Context