be found. Chart 1: How country debts and budget deficits compare [pic] Source: Eurostat Newsrelease Euroindicators 2010 According to the Chart 1 above, the debt of Italy is 115.8% of GDP and Greece (115.1% of GDP) is closely followed, while Ireland has the highest budget deficit of 14.3% of GDP and next is Greece (13.6% of GDP). However, the European Union member states were required to have 3% for the ratio of the actual government deficit to GDP as market prices and 60% for the ratio of government
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Non-linear Effects of Fiscal Deficits on Growth in Developing Countries Christopher S. Adam and David L. Bevan(*) Department of Economics, University of Oxford August 2001 Revised December 2001 Abstract This paper examines the relation between fiscal deficits and growth for a panel of 45 developing countries. It finds evidence of a threshold effect at a level of the deficit around 1.5% of GDP. While there appears to be a growth payoff to reducing deficits to this level, this effect disappears
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Driscoll ECO 203 Principles of Macroeconomics Instructor: Jason Friedline October 23, 2012 Balanced Budget Economists generally agree that high budget deficits today will reduce the growth rate of the economy of the future. The difference between what a government spends and what it collects in taxes in a given period is known as a budget deficit. There are many reasons why this might happen. One might be that if our government keeps spending money that does not exist obviously the more debt will
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by the European Union’s requirements such as, the government budget deficit cannot exceed 3% and the debt to GDP ratio cannot exceed 60%.Greece has had an inflation rate above 4% and budget deficit of 6-10% of GDP, with the highest being 15/7% in 2010. The debt to GDP of Greece exceed 60% in 2012, it was 70.3 higher. As a result, Greece has implement contractionary fiscal policies to help control its inflation and budget deficits. As the Greek economy undergoes an extended period of economic
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Budget Deficit For many decades, there has been a concern for the deficit within the United States. Many politicians, authors, newscasters, and citizens have expressed their distress in order to resolve or control the issue. Keynesian economic theory states that running a budget deficit is okay, as long as the deficit is not exorbitantly large and is not carried for a long period of time. Even though many experts agree with this notion, having a deficit at all is important to the present and
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Budget Deficits, National Saving, and Interest Rates William G. Gale and Peter R. Orszag September 2004 Brookings Institution and Tax Policy Center. This paper was prepared for the Brookings Panel on Economic Activity, September 9-10, 2004. We thank Emil Apostolov, Matt Hall, Brennan Kelly, and Melody Keung for outstanding research assistance; Alan Auerbach, William Brainard, Robert Cumby, Bill Dickens, Doug Elmendorf, Eric Engen, Laurence Kotlikoff, Thomas Laubach, Maria Perozek, George
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Y V Reddy: Fiscal policy and economic reforms Address by Dr Y V Reddy, Governor of the Reserve Bank of India, at the National Institute of Public Finance and Policy (NIPFP), New Delhi, 26 May 2008 (edited transcript). * * * Respected Professor Govinda Rao and distinguished scholars, I am honoured by my friend, Prof. Govinda Rao’s, kind invitation to me to visit the National Institute of Public Finance and Policy (NIPFP). I had the opportunity of working very closely with the NIPFP on several
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CONGRESS OF THE UNITED STATES CONGRESSIONAL BUDGET OFFICE CBO The Budget and Economic Outlook: Fiscal Years 2013 to 2023 Percentage of GDP 120 100 80 60 40 20 0 1940 1945 Actual Projected 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 Federal Debt Held by the Public Trillions of 2005 dollars 20 18 16 14 12 10 0 2000 2004 2008 Potential GDP GDP Actual Projected Percent 12 10 8 6 4 2 0 2000 Actual Projected 2012
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a) Figure 1 shows the UK’s fiscal deficits between 2001/02 and 2013/14. In 2007-8, the UK’s fiscal deficit stood at around 2.3% of GDP however by 2009-10 the UK’s fiscal deficit was 12.4%. A fiscal deficit occurs when government expenditure is higher than revenue received from taxes. One reason for the fiscal deficit was the recession. During the recession many people lost their jobs so the government had to pay out more benefits whilst at the same time they received less tax revenue. The government
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Fiscal Policy ECO372 August 14, 2012 Fiscal Policy Introduction Depending on whether a country is running a deficit, a surplus, or a debt, businesses and individuals are affected differently. “The most important budget in the world is that of the United States government. The U.S. budget impacts not only the United States of America but foreign investment, trade, and the economies of nations throughout the world.” (Boothe, 2003) The objective of this paper is to provide examples of how
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