The Contradictions of Balanced Structural Government Budgets

17 Pages Posted: 6 Jun 2012

Date Written: June 6, 2012

Abstract

The paper points to the push for balanced budgets in many countries. It briefly reviews the rationale for balanced budgets and finds them wanting. It is argued that a balanced budget and economy operating at potential output are in generally incompatible and hence a balanced structural budget is not possible. It is argued that there are major issues in the estimation of potential output and of the size of structural budget position, which creates severe difficulties in using the structural budget position as an objective of fiscal policy.

Keywords: balanced budget, potential output, structural budget

JEL Classification: E61, E62

Suggested Citation

Sawyer, Malcolm C., The Contradictions of Balanced Structural Government Budgets (June 6, 2012). Available at SSRN: https://ssrn.com/abstract=2078818 or http://dx.doi.org/10.2139/ssrn.2078818

Malcolm C. Sawyer (Contact Author)

Levy Economics Institute ( email )

Blithewood
Annandale-on-Hudson, NY 12504-5000
United States
845-758-7700 (Phone)
845-758-1149 (Fax)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
82
Abstract Views
560
rank
330,769
PlumX Metrics