Composition Of Government Expenditure Research Articles

Private Consumption, Government Spending, Debt Neutrality: Resolving Kormendi-Feldstein- Modigliani Controversy

The debt neutrality hypothesis, in its quintessential form, postulates that debt/tax mix for fmancing deficit is irrelevant. More precisely, the debt-neutrality deals with the two fundamental questions: (i) Given the volume and composition of government expenditures, does it matter whether they are fmanced by taxes or debt issue? (ii) Do public deficits absorb private savings that otherwise fmance private capital formation? Juxtaposed to the traditional Keynesian theory which answers these questions positively, the exponents of debt-neutrality make the counter-claim that debt is neutral and public deficits have no "crowding out" effects on private saving or investment. The debt-neutrality is popularly termed as the Ricardian Equivalence Hypothesis because the fundamental logic underlying this hypothesis was originally presented by David Ricardo in Chapter XVII entitled "Taxes on Other Commodities than Raw Produce" of his celebrated "The Principles of Political Economy and Taxation". Although Ricardo explained why government borrowing and taxes could be equivalent, he never sponsored the case for unlimited issue of government bonds. In fact, he warned against the consequences of continuous fiscal deficits in the following words: "Form what I have said, it must not be inferred that I consider the system of borrowing as the best calculated to defray the extraordinary expenses.....................

Structural change in the United States: Social accounting estimates for 1982?1988

During the 1980's, extensive structural adjustments took place in the U.S. economy. This paper uses estimates of sectorally detailed social accounting matrices to evaluate the changes in receipt and expenditure patterns, including interindustry linkages, over the 1982–1988 period. Among other effects, our results reveal increasing service orientation, shifts in energy use, and increased import and foreign investment dependence. Detailed evidence on direct and indirect demand linkages indicates large shifts in the composition of government expenditure and private investment, the latter being intensified by declines in the rate of domestic capital formation.

Macroeconomic Policy for Australia in the 1990s

AbstractThe size of the deficit has little if any significance as an indicator of short-run macroeconomic policy. Government expenditure should be determined by longer term aspirations. Taxation (and other revenue measures) must be used, along with monetary policy, for short-term economic management, but whether revenue should be at a level that results in a deficit or not depends on many things including the composition of government expenditure and the state of the economy. At present, our economy requires a brake on total consumption expenditure and this may require a rise in taxation levels despite the high current level of unemployment. A high rate of capital accumulation is essential to change the structure of production and to increase output and productivity, but the brake on consumption must be eventually relaxed. Without an expectation of healthy consumption growth there will not be an ongoing high rate of accumulation in the private sector.

The Birth of the Old Federalism: Financing the New Deal, 1932–1940

The relative importance of federal and local government was reversed between 1932 and 1940. This changing composition of government expenditures by level of government accounts for the rise of “big” government during the Depression. State governments expanded their fiscal activity, maintaining their share of total government expenditures. Utilizing data on federal grants and state and local expenditures, I find that the relative decline of local governments and sustained growth of state governments can be explained by the financial and administrative provisions of the federal New Deal programs.

Evaluating the economic impact of government expenditure by department, an application of input output analysis

Economists have long recognized the employment, income and distributional effects of variations in the volume of public expenditures, but only recently have they begun to pay attention to the effects of changes in the composition of these expenditures.* In these studies, government is treated as an ultimate buyer and its purchases are traced directly to particular industries through an input-output model. However. these studies have generally neglected the fact that variations in government expenditures entail changes in industrial purchases as a consequence of changes in government functions (e.g. Education. Health. Transportation and Communications, etc.).+ In other words. government purchases from industries normally occur under different programs, and, consequently. the impact of changes m the mdustrlal composition of government expenditures ought to be analyzed in terms of changes in the composition of government programs. Since government budgetmg procedures allocate revenue to departments (e.g. Department of Health. Department of Civil Service. etc.) that undertake the expenditures and since there exists no unique way in which department expenditures are grouped under functions. the analysis of the impact of government expenditures IS pursued in terms of the impact of expenditures by the various departments. In fact. input-output tables do not usually report the final demand components of government expenditures according to government departments and the final demand entrles must be reclassified m this way.f In this paper, the Ontario mpu-output table is the starting point. The final demand categories of Provincial government expenditures are adjusted to corre-

Derivation of Ministrywise Commodity Composition of Government Expenditure from Budget and other Documents

Government expenditure has acquired great importance in modern times, on an increasing scale, particularly in underdeveloped countries because of the ever increasing and indispensable economic activities of the State in various directions. The nature and the volume of government expenditure have necessarily important effects on production, distribution and general level of economic activity of a nation.

Government Capital Budgets

THE FORM in which a government's budget is presented reflects to some extent official attitudes toward the various components of receipts and expenditures, and it also influences popular interpretations of the government's program. In this respect the treatment of capital receipts and expenditures is especially important. A number of countries maintain separate capital and current budgets, and other countries accord special treatment by other means to at least a part of capital items. The advisability of introducing a capital budget has recently been under public discussion in several countries that have not used the device. At the same time, there have been indications that in some countries with established capital budgets the financial implications of the system are being reconsidered. This paper explores the economic implications of a dual government budget system involving separate capital and current budgets. It reviews the purposes that such systems appear to be intended to serve and criteria for distinguishing between capital and current items. The influence of a dual budget system on the amount and composition of government expenditures and means of financing is examined. Attention is also given to the problem of measuring government expenditures, receipts, and surplus or deficit when a separate capital budget is employed.'