A Balance Sheet Approach to Fiscal Policy

So early fiscal consolidation can be expansionary on balance.

This is needed to prevent even more private debt being put on government balance sheets, causing a fiscal blowout.

Koizumi sought smaller government and set clear numerical targets for fiscal consolidation, including a primary budget balance in 10 years.

Unemployment was soaring, and austerity, rather than restoring fiscal balance, simply exacerbated the economic downturn.

Now, with household debt sustained on a knife edge after feverish government intervention, the fiscal position has deteriorated dramatically and the current account balance has worsened again.

There are other instruments available for increasing domestic saving and reducing consumption besides the fiscal balance.

The news from Greece these days has been dominated by the announcement that the government achieved a primary budget surplus (the fiscal balance minus debt service) in 2013.

Fiscal discipline does not sound as visionary as economic government.

The Federal government has thrown fiscal prudence out the window.

The right balance today requires creating jobs partly through additional fiscal stimulus aimed at productive infrastructure investment.

Indeed, Koizumi s government demonstrated the best way to tackle fiscal consolidation.

But Tymoshenko s government has, in reality, done a solid fiscal job.

Booming tax receipts have provided the government with a fiscal surplus.

America s domestic demand shortfall reflects rising savings, balance sheet damage in the household sector, unemployment, and fiscal distress.

Beyond the balance of representation in parliament and government, a balance might need to be struck between the highest offices of state.

In trying to balance such considerations, the government is in over its head.

Thus, greater reliance on fiscal policy increased government spending would be necessary.

The weak fiscal position will severely constrain whatever government comes to power.

balance

Chile sets a target for its cyclically adjusted fiscal balance that is, the balance that emerges after accounting for the deviations in commodity prices and domestic output from their trends.

Now consider fiscal policy. The baroque structure of US government has always been hostile to the effective exercise of fiscal policy.

Acknowledging that recent fiscal policies had put the US on an unsustainable trajectory of rising public debt, Obama said that moving towards budget balance was now essential for fiscal stability.

But sounder fiscal policy might lead to even higher inflows as the country s external balance and sovereign risk outlook improve.

In the coming years, Brazil s government also should strive for fiscal balance (last year the deficit was still 3 of GDP), and then to attain a surplus, as Chile has done for years now.

There are other instruments available for increasing domestic saving and reducing consumption besides the fiscal balance. Government policies can target private saving directly, by creating incentives for saving through appropriate tax and pension policies.

Balance Sheet

Even with external assistance, many view default as a near certainty, because the arithmetic of restoring fiscal balance is so daunting.

A government that cannot balance its own finances cannot be relied on to provide macroeconomic stability.

It would be far preferable to balance tax increases with some reversal of runaway government spending.

Because the federal government disburses fiscal allocations to Malaysia s 13 states, the government will be tempted to squeeze opposition held states.

China s current legal framework contributed to fiscal balance and financial stability in the past, and it continues to play a positive role.

Such a pact would oblige governments to use fiscal and wage policies as well as overall economic policy to achieve external balance.

As a result, from 1995 to 2007, inflation adjusted government fiscal revenue increased 5.7 times.

Obama will need to put forward a medium term fiscal plan that restores government finances.

In the fiscal year ending in March 2002 the government budgeted 731.4 billion rupees (US 15.2) for defense, up 12 from the previous fiscal year.

When financial markets concentrate on the fiscal health of the federal government, they miss the extent of government obligations as a whole.

The central issue of our time is finding the right balance between the government and the market.

D. Gender balance

Don t get me wrong, I am not arguing for fiscal profligacy. But the balance of risks has shifted over the past few years.

Fiscal and monetary policies had focused on boosting industrial growth, without regard to macroeconomic balance, resulting in chronically excessive demand and widespread shortages.

For a long term balance sheet approach to gain traction, politicians will have to drop the ideological biases that are distorting fiscal policy.

Then came the financial crisis, with the central government adopting fiscal stimulus and relaxing monetary policy.

Despite the parlous fiscal position, for now the market for Japanese government bonds (JGBs) remains stable.

The only alternative was severe fiscal austerity, for which the government never mustered the political will.