Ch12 BUDGET BALANCE AND GOVERNMENT DEBT（课件）- 《财政金融英文版》同步教学（人民大学版）

BUDGET BALANCE AND GOVERNMENT DEBT C h a p t e r 12 Federal Budget Balance Borrowing is an alternative to current taxation as a means of financing government expenditures. Budget deficit is excess of government outlays over receipts taken in taxes, fees, and charges levied by government authorities. Budget surplus is excess of government receipts over outlays. Federal budget balance as a percentage of GDP has been negative, signifying a budget deficit, in most years over the period 1962–2005. Federal Budget Balance High-Employment Deficit or Surplus A calculation that estimates the budget deficit or surplus that would prevail at a certain designated level of unemployment in the economy Government expenditures raise as unemployment rates go up Tax revenues increase with increase in employment Standardized level of employment usually set between 5% and 6% Receipts and expenditures adjusted accordingly to reflect their levels if 94% to 95% of those in the labor force were actually employed Measuring the Budget Balance Unified budget balance is the difference between all federal government expenditures and revenues, “on budget” or “off budget”. Main “off budget” operations – Social Security, postal service NIPA budget balance is official measure of federal deficit in the National Income and Product Accounts. Does not include transactions that finance preexisting debts, such as outlays for deposit insurance Real budget balance is a measure of change in federal debt after adjustment for effects of inflation and changing interest rates on the real market value of the outstanding net debt. Deficit and Political Equilibrium By borrowing rather than using taxes to finance government activities, politicians can influence willingness of voters to vote for increased spending. Deficits can affect resource allocation and overall size of government in the economy. Borrowing postpones burden of taxation, so often used to finance investments that will provide a stream of future be