Cyclical government budget deficit

state budget deficit is the amount by which its annual costs exceed revenues.Said concept is closely related to the definition of "government debt" - the amount of debt the state or foreign legal entities or their representatives.Accordingly, the duty can be external or internal.

state budget deficit could be covered by an annual increase in the national debt.In addition, there is a money issue.It should be noted that even a balanced budget in the state does not indicate a healthy economy.This applies in particular to the case where a country has substantial debt.

There are different kinds of budget deficit.The key should include the following:

  1. cyclical.
  2. structural.
  3. operating.
  4. Primary.
  5. quasi-fiscal.

cyclical public deficit is a result of the built-in economic stabilizers."Embedded" (automatic) stabilizers are a special mechanism of the economy, whereby it becomes possible to reduce the amplitude of cyclical fluctuations in output and employment levels.It is not carried out frequent changes in the economic sector.These stabilizers in industrialized countries are the tax system and government transfers (unemployment insurance in particular), as well as a system of profit-sharing.Automatic mechanisms to some extent mitigate the problem of long lags in discretionary fiscal policy.This is achieved mainly due to the fact that regulators are beginning to function independently, without government interference.

Within the framework of discretionary fiscal policy to stimulate the general (aggregate) demand during the slowdown the government adopted a special decision.These solutions are aimed at raising the level of output and employment.In the process of their implementation, in view of the fact that certain expenses of the budget increase (for example, provides funding for programs related to the formation of new jobs), or reduced the number of taxes, creates a lack of finance in the targeted country.At the same time during the ascent to curb inflation created prerequisites targeted surplus.

Discretionary government policies associated with significant internal lags in time, because the changes in the cost structure or rates of taxation implies a long discussion at the parliamentary level.

Within the framework of non-discretionary fiscal deficit of the state budget, as well as its surplus is generated automatically.This is affected by the economic stabilizers built.

formation of effective structures Employment Insurance and the progressive nature of the tax is considered a priority, pursued by the transition form the economy.Under these conditions, stabilization policy objective difficulties exist in addition to the lack of optimal monetary, fiscal, and other regulatory mechanisms of macroeconomic condition.

level "embedded economic stability" is directly dependent on the performance of cyclical budget deficits.They are automatic "shock absorbers" vibrations total (aggregate) demand.It arises due to the fact that certain types of revenues (tax revenues, in particular) increased (reduced) at the same time a reduction (increase) transfers on the background of the recession (recovery) of entrepreneurial activity.