1 fiscal policy. Fiscal policy. Types, goals and main instruments of fiscal policy

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Plan

Introduction

Chapter 1. The concept of fiscal policy, its goals and instruments

1.1 Concept of fiscal policy

1.2 Types of fiscal policy

1.3 Fiscal policy instruments

Chapter 2. The effectiveness of the fiscal policy of the state

2.1 Statement of the problem and research methodology

2.2 Economic methods for assessing the effectiveness of fiscal policy

2.3 Analytical methods for assessing the effectiveness of fiscal policy

Chapter 3. Features of fiscal policy in Russia

3.1 Advantages and Disadvantages of Fiscal Policy

3.2 Prospects for the development of fiscal policy in the Russian state

Conclusion

List of used literature

Introduction

The main task of the state at all stages of its development is to stabilize the economy. At the present time, the state is actively using instruments of intervention in the economy. The main 2 types of government intervention in the market economy include fiscal and monetary policy.

The purpose of this course work is to study the fiscal, or the so-called fiscal policy of the state. The role of fiscal policy in holistic economic management is great. Being one of the most important instruments of state regulation of the economy, it directly forms the state budget, state monetary revenues. In market conditions, fiscal policy is the core part of state economic policy.

Fiscal policy as the most important element of the financial policy of the state performs a number of important functions, such as mobilization and attraction of funds necessary for the functioning of the state, their distribution in order to solve the socio-economic problems of the country.

The theoretical framework for fiscal policy is fairly well developed. But this area of economics has not exhausted itself. Many controversial and unresolved problems of the implementation of fiscal policy, its impact on the development of the state require further improvement and solutions. In the past, for a long time, the fiscal policy was considered by economists only from the aspect of the proportions of the distribution of the country's output.

The relevance of the study of fiscal policy has determined the choice of the topic of this course work. In a market economy, it is especially important to know the essence, functions, types and instruments of fiscal policy, as well as the mechanism of its action for a more correct orientation in the existing situation in the country in order to make the correct management decision.

The purpose of our work was to study the mechanism for implementing the fiscal policy of the state.

The main objectives of this course work are to study:

The essential characteristics of fiscal policy,

Types of fiscal policy,

Fiscal policy instruments,

Effectiveness of the state fiscal policy

Given the relevance of the study of fiscal policy, it is not surprising to note that this topic was studied by many economists, who in their own way gave an answer to the question about the essence of fiscal policy, the impact of its instruments on the economic situation in the state. Almost all textbooks pay great attention to the problems of fiscal policy and the mechanisms of its functioning.

When working on the topic of this course work, the works of foreign and domestic authors on the financial policy of the state, textbooks, articles of economic magazines and newspapers, statistical data, as well as materials from Internet sites were used.

Chapter 1. The concept of fiscal policy, its goals and instruments

1.1 Concept of fiscal policy

Fiscal policy is a system of regulation related to government spending and taxes. Government spending refers to the cost of maintaining the institution of the state, as well as government procurement of goods and services. These can be various types of purchases, for example, the construction of roads, schools, medical institutions, cultural facilities, purchases of agricultural products, foreign trade purchases, purchases of military equipment, etc. at the expense of the budget. The main distinguishing feature of all these purchases is that the consumer is the state itself. Usually, speaking of government purchases, they are divided into two types: purchases for the state's own consumption, which are more or less stable, and purchases to regulate the market.

Government spending plays a significant role in the socio-economic development of society. The large deficit of the state budget that has developed in Russia exceeds reasonable limits and leads to a financial imbalance in the national economy. Therefore, the issue of increasing the efficiency of public spending, giving them a regulatory role in ensuring the stability of socio-economic development, and shaping a new quality of economic growth is highly relevant.

It should be emphasized that any state, regardless of its political system, pursues one or another fiscal policy, since for its existence and functioning it needs financial resources, which it receives from taxes. But the main task of fiscal policy is not so much to ensure the balance of the budget as to balance the macroeconomic system. With a lack of private spending to maintain aggregate demand, an increase in government spending is necessary. Consumer expenditures of the population, investment expenditures of enterprises are made by separate entities and are not always mutually consistent with each other. Fiscal policy allows adjusting the dynamics of GNP in the desired direction.

The policy of government spending and taxes is one of the most important instruments of government regulation of the economy aimed at stabilizing economic development. Government spending and taxes have a direct impact on the level of total expenditures, and, consequently, on the volume of national production and employment. In this regard, the well-known Western economist J. Galbraith noted that the tax system began to turn from an instrument for increasing government revenues into an instrument for regulating demand, which, in his opinion, is an organic need of the industrial system. economic fiscal expenditure

Fiscal policy is a fairly strong tool in the fight against the negative phenomena of the cyclical nature of economic development. In fact, the main task of fiscal policy is to smooth out the shortcomings of the market element by consciously influencing aggregate demand and aggregate supply in the market. But it must be borne in mind that not a single instrument in the economy is 100% perfect.

The fiscal state influences the increase or decrease in national production by varying tax rates and implementing government spending. The theoretical substantiation of these actions was the calculations of the American economist A. Laffer, who proved that the result of tax cuts is an economic recovery and an increase in government revenues (Laffer curve).

Graphically, the Laffer curve looks like this (Fig. 1).

Figure 1- Laffer Curve

The abscissa in this graph shows the value of the interest rate r, and the ordinate shows the value of tax revenues R. If r = 0, the state will not receive any tax revenues. As soon as r = 100%, all incentives for production completely disappear (because all incomes of producers are withdrawn), that is, the result for the state is the same - zero. For any other values (r<0<100%) государство налоговые поступления в том или ином размере получает. При каком-то конкретном значении ставки (r=r0) общая сумма этих поступлений становится максимальной (R0=Rmax). Отсюда вытекает следующий вывод: рост процентной ставки только до определенного значения (r=r0) ведет к увеличению налоговых поступлений, дальнейшее же ее повышение обусловливает, напротив, их уменьшение. Так, R0>R1, R0> R2.

The general properties of the Laffer curve can be characterized as follows: since with a weakening of the tax pressure, some subjects of production begin to work more intensively, maximizing their income, while others reach the desired value of the latter with less effort, the curve in question is flat and reacts relatively weakly to minor changes in tax rates ... In addition, the reaction of economic agents to the dynamics of these rates does not appear instantly, but after a certain time interval.

The Laffer curve reflects the objective dependence of the growth of government revenues on the decrease in tax rates. At the same time, it is impossible to theoretically reveal the value of r0; it is determined empirically. In this case, it is extremely important to identify where the actual tax rate is located - to the right or to the left of r0. And since major macroeconomic experiments are fraught with serious shocks, this question is usually answered by analyzing the response of producers to tax breaks in specific industries.

1.2 Types of fiscal policy

Fiscal (fiscal policy) is a system for regulating the economy through changes in government spending and taxes.

Distinguish between discretionary and automatic forms of fiscal policy. Discretionary policy refers to the maneuvering of taxes and government spending in order to change the real volume of national production, control of the level of employment and the rate of inflation. This form of fiscal policy is opposed by its automatic form. "Automatism" is "built-in stability" based on the provision of budget revenues by the tax system depending on the level of economic activity.

Automatic fiscal policy. Automatic fiscal policy is an economic mechanism that allows to reduce the amplitude of cyclical fluctuations in employment and output levels without resorting to frequent changes in the government's economic policy. Built-in stabilizers inherent in it, which are income taxes, unemployment benefits, expenses for retraining programs for workers, etc., are in principle necessary, they reduce the amplitude of fluctuations during the economic cycle. For example, if the economy is in a downturn, the marginal tax rate is reduced due to a decrease in taxable income; disposable income will be smaller also because social benefits increase. At the same time, disposable income declines to a lesser extent compared to income before taxes. The marginal capacity to consume increases in a downturn, as those receiving unemployment benefits use it almost entirely for consumption. If the economy is on the rise, disposable income does not rise to the same extent as total pre-tax income, as tax rates rise and social benefits decline. Another advantage of automatic stabilizers is that they reduce income inequality. Progressive income taxes and transfer payments are instruments of income redistribution in favor of the poor. In addition, the stabilizers are already built into the system; no legislative or executive decision is required to put them into effect. Their essence lies in linking tax rates with the amount of income received. Almost all taxes are structured in such a way as to ensure an increase in tax revenues with an increase in the net national product. This applies to personal income tax, which is progressive in nature; income tax; added value; sales tax, excise taxes.

Figure 2 shows the built-in stabilizers. On it, the size of government spending is constant. In fact, they change. But these changes depend on the decisions of parliament and government, and not on the growth of GNP. Therefore, the graph does not show a direct relationship between government spending and an increase in NPP. Tax revenues rise during the recovery. This is because sales and revenues are increasing. Withdrawal of part of the income by taxes restrains the rates of economic growth and inflation. As a result of the acting forces, in addition to the efforts of the government, overheating of the economy due to imbalances during the recovery is prevented.

Figure 2- Built-in stabilizers, where: G - government spending; T - tax revenue

During this period, tax revenues exceed government spending (T> G). There is a surplus - a surplus of the state budget, which allows you to pay off government debt obligations taken during the depression period of the economy.

The graph also reflects the fall in tax revenues during the period when the NNP decreases, i.e., production falls, which leads to the formation of a state budget deficit (G> T). If the volume of tax revenues remained at the same level during the economic crisis, the economic situation for business would mean higher economic risks, which provoked a further curtailment of production. This means that a decrease in tax revenues during this period objectively protects society from an escalation of the crisis and weakens the decline in production.

Built-in stabilizers do not eliminate the causes of cyclical fluctuations, but only limit the range of these fluctuations. Therefore, built-in stabilizers of the economy, as a rule, are combined with measures of discretionary fiscal policy of the government aimed at ensuring full employment of resources.

Discretionary fiscal policy includes the regulation of government spending and taxes in order to eliminate cyclical fluctuations in output and employment, stabilize the price level, and stimulate economic growth. In the United States, the employment laws of 1946 and the Lamphrey-Hawkins of 1978 make the federal government responsible for ensuring full employment through the use of monetary and fiscal policies. This task is extremely difficult for many reasons, not least because public funds are spent on implementing many programs, not only on stabilizing the economy and ensuring economic growth, for example, on social security programs, strengthening the country's road network, flood control , improving education, replacing old and dangerous bridges, environmental protection, basic research.

There are two types of discretionary policies:

Stimulating,

Restraining.

Stimulating fiscal policy is carried out during a period of recession, depression, includes an increase in government spending, tax cuts and leads to a budget deficit.

In the short term, the goal is to overcome cyclical downturns in the economy and involves an increase in government spending, tax cuts or a combination of these measures.

In the longer term, tax-cutting policies can lead to an increased supply of factors of production and an increase in economic potential.

The implementation of these goals is associated with the implementation of a comprehensive tax reform, accompanied by a restrictive monetary policy of the Central Bank and a change in the optimization of the structure of government spending.

Restraining fiscal policy is carried out during the boom and inflation period, includes cutting government spending, raising taxes, and leading to a surplus of the state budget.

It aims to limit the cyclical recovery of the economy and involves reducing government spending, increasing taxes or a combination of these measures.

In the short term, these measures help to reduce demand inflation at the cost of rising unemployment and a decline in production. In a longer period, a growing tax wedge can serve as the basis for a decline in aggregate supply and the deployment of a stagflation mechanism (recession, or a significant slowdown in economic development), especially in the case when government spending cuts are carried out proportionally across all budget items and no priorities are created in favor of government investment in labor market infrastructure.

Both discretionary and automatic fiscal policies play an important role in the stabilization measures of the state, but neither one nor the other is a panacea for all economic ills. As for automatic policy, its inherent built-in stabilizers can only limit the range and depth of fluctuations in the economic cycle, but they are not able to completely eliminate these fluctuations.

More problems arise with discretionary fiscal policy. These include:

The presence of a time lag between decision-making and their impact on the economy;

Administrative delays;

Addiction to incentive measures (tax cuts are politically popular, but tax increases can cost parliamentarians a career).

Reasonable use of tools of both automatic and discretionary policies can significantly affect the dynamics of social production and employment, reduce inflation and solve other economic problems.

1.3 Fiscal policy instruments

The set of fiscal policy instruments includes government subsidies, manipulation of various types of taxes (personal income tax, corporate tax, excise taxes) by changing tax rates or lump-sum taxes. In addition, the instruments of fiscal policy include transfer payments and other types of government spending. Different instruments affect the economy in different ways. For example, an increase in the lump sum tax results in a decrease in total spending but does not change the multiplier, while an increase in personal income tax rates will cause a decrease in both total costs and the multiplier. The choice of different types of taxes - personal income tax, corporate tax or excise tax - as an instrument of influence has various effects on the economy, including on incentives that affect economic growth and economic efficiency. The choice of a particular type of government spending is also important, since the multiplier effect can be different in each case. For example, there is a perception among policymakers that defense spending provides a lower multiplier than other types of government spending.

Depending on the phase of the cycle in which the economy is located, and the type of fiscal policy corresponding to it, the instruments of fiscal policy of the state are used in different ways. So, the instruments of the stimulating fiscal policy are:

increasing government procurement;

tax cuts;

increase in transfers.

The instruments of the restraining fiscal policy are:

reduction in public procurement;

increase in taxes;

reduction in transfers.

A slightly different list of fiscal policy instruments is presented in the textbook "Economics" by academician G.P. Zhuravleva. According to this source of literature, the instruments of discretionary fiscal policy are public works, changes in transfer payments, and manipulation of tax rates.

The author of this textbook refers to changes in tax revenues, unemployment benefits and other social payments, subsidies to farmers as instruments of automatic fiscal policy.

Analyzing the literature sources, one can come to the conclusion that the main instruments of fiscal policy are changes in taxes and transfer payments.

One of the main instruments of fiscal policy is taxes, which are funds forcibly withdrawn by the state or local authorities from individuals and legal entities necessary for the state to carry out its functions.

Taxes have three main functions:

fiscal, which consists in the collection of funds for the creation of state funds and material conditions for the functioning of the state;

economic, involving the use of taxes as a tool for the redistribution of national income, impact on the expansion or containment of production, stimulating producers in the development of various types of economic activity;

social, aimed at maintaining social equilibrium by changing the ratio between the incomes of individual social groups in order to smooth out inequality between them.

There are different types of taxes in the modern economy.

Direct taxes are taxes on income or property of taxpayers. In turn, direct taxes are subdivided into real taxes, which were most widespread in the first half of the 19th century, and which include land, house, trade, securities tax;

personal, including income, taxes on corporate profits, on capital gains, on excess profits.

Indirect taxes consist of excise taxes, value added taxes, sales taxes, turnover taxes, and customs duties.

Depending on the authority at the disposal of which certain taxes are received, state and local taxes are distinguished. In Russian conditions, these are federal, federal, local taxes.

Depending on the use, taxes are divided into:

general, intended for financing current and capital expenditures of the budget, without assigning to any specific type of expenditure;

special taxes for specific purposes.

Depending on the nature of the rates, taxes are distinguished:

firm (fixed), established in an absolute amount per unit of taxation, regardless of various economic indicators related to business activity;

regressive, in which the percentage of income withdrawal decreases with increasing income;

proportional, manifested in the fact that the same rates apply regardless of the amount of income;

progressive, in which the percentage of withdrawals increases as income increases.

A group of American specialists led by A. Laffer studied the dependence of the amount of tax revenues to the budget on income tax rates. This dependence is reflected by the Laffer curve.

Tax rates are set in the form of a percentage, which determines the proportion of income withheld. Until a certain increase in the tax rate, incomes grow, but then they begin to decline. As the tax rate rises, the desire of enterprises to maintain high production volumes will begin to decline, and corporate incomes will decrease, and with them corporate tax revenues. Consequently, there is such a value of the tax rate at which tax revenues to the state budget will reach the maximum value. It is advisable for the state to set the tax rate at this value. Laffer's group has theoretically proved that a tax rate of 50% is optimal. At this rate, the maximum amount of taxes is reached. At a higher tax rate, the business activity of firms and workers sharply decreases, and then incomes flow into the shadow economy.

However, in many countries, tax rates are significantly higher than the optimal level, and this is due to the influence of other factors that are not taken into account in the theoretical model. For example, in countries gravitating towards strong government regulation, the desire to increase the budget through the revenue side will prevail. Tax rates in such countries are high. Conversely, if a country gravitates towards a liberal market structure, towards minimal government intervention in the economy, tax rates will be lower. In addition, the desire to have a socially oriented economy and allocate a significant part of budgetary allocations to social assistance does not allow a significant reduction in tax rates - in order to avoid a lack of budgetary funds for social needs. The high tax rates in the Russian economy are primarily due to the budget deficit, the lack of public funds for the implementation of socio-economic programs and the weak hope that the reduction in tax rates will lead to an increase in production and economic recovery. In order to somehow mitigate the tax pressure for individual taxpayers, tax incentives are applied - a form of lowering tax rates or, in the extreme case, exemption from paying taxes. Sometimes tax breaks are used as an incentive based on the fact that a tax cut is adequate to provide the taxpayer with additional funds equal to the amount of the reduction. The problem of choosing and setting rational tax rates is faced by any state.

Obviously, the higher the taxes, the less income the subject will have, which means less to buy and save. Therefore, a reasonable tax policy presupposes a comprehensive account of those factors that can stimulate or slow down economic development and the welfare of society.

Such an instrument of the state's fiscal policy as taxes is closely related to another instrument of fiscal policy - government spending. Funds withdrawn in the form of taxes go to the state budget, subsequently spent on various purposes of the state. In the conditions of the current legislation of the Russian Federation, the main part of the budget is replenished from payments of taxpayers - legal entities.

Currently, the point of view has become widespread about the need for an additional significant reduction in tax rates for main taxes. In support of this, the authors point out that despite a temporary drop in tax revenues, in the long term, investment conditions are improving, the production of goods and services will increase, employment of the population will increase and, due to the growth of the tax base, government revenues will begin to grow.

Government or government spending refers to the cost of maintaining the institution of the state, as well as government purchases of goods and services.

State purchases of goods and services can be of various types: from construction at the expense of the budget of schools, medical institutions, roads, cultural objects to the purchase of agricultural products, military equipment, samples of unique products. This also includes foreign trade purchases. The main distinguishing feature of all these purchases is that the state itself is the consumer. Usually speaking about public procurement, they are divided into two types: purchases for the state's own consumption, which are more or less stable, and purchases to regulate the market.

The state increases its purchases during the recession and crisis and reduces during the recovery and inflation in order to maintain the stability of production. At the same time, these actions are aimed at regulating the market, maintaining a balance between supply and demand. This goal is one of the most important macroeconomic functions of the state.

Government spending plays a significant role in the socio-economic development of society. Hence, they are objectively necessary, and at the same time, their exceeding reasonable limits can lead to financial instability in the national economy, an excessive state budget deficit.

Government spending takes the form of:

state order, which is distributed on a competitive basis;

construction at the expense of capital investments;

defense spending, administration, etc.

The bulk of government spending goes through the state budget, which includes the budgets of the federal government and local authorities.

The state budget is an annual plan of government expenditures and the sources of their financial coverage (income). In modern conditions, the budget is also a powerful lever of state regulation of the economy, impact on the economic situation, as well as the implementation of anti-crisis measures.

The state budget is a centralized fund of monetary resources, which the government of the country has at its disposal to maintain the state apparatus, the armed forces, as well as perform the necessary socio-economic functions.

Expenditures show the direction and purpose of budget allocations and perform the functions of political, social and economic regulation. They are always targeted and, as a rule, irrevocable. The irrevocable provision of public funds from the budget for targeted development is called budget financing. This mode of spending financial resources differs from bank lending, which assumes the repayment nature of the loan. It should be noted that the irrevocability of the provision of financial resources does not mean arbitrariness in their use. Whenever financing is applied, the state develops the procedure and conditions for using money for the targeted direction and ensuring general economic growth and improving the life of the population.

The structure of government spending in each country has its own characteristics. They are determined not only by national traditions, the organization of education and health care, but mainly by the nature of the administrative system, structural features of the economy, the development of defense industries, the size of the army, etc.

Government transfers, being one of the instruments of fiscal policy, represent payments by government bodies that are not related to the movement of goods and services. They redistribute government revenues from taxpayers through benefits, pensions, social security payments, etc. Transfer payments have a lower multiplier than other government expenditures because some of these amounts are saved. The multiplier of transfer payments is equal to the multiplier of government spending times the marginal capacity to consume. The advantage of transfer payments is that they can be directed to specific groups of the population. Social transfers (pensions, scholarships, various benefits) are included in the average income, and these payments can increase the family's budget by 10-12%.

Fiscal policy instruments influence the economic situation in their own way, helping to achieve the goals set for fiscal policy. The main instruments of the state's fiscal policy are changes in taxes and transfer payments. Fiscal policy instruments are interconnected and their role in the implementation of one or another state policy is great.

Chapter 2. Efficiencyfiscal policy of the state

2.1 Statement of the problem and research methodology

Recently, many studies have been carried out in which an attempt is made to assess the effectiveness of certain aspects of the fiscal system by finding Laffer points for specific types of tax collections.

At the same time, the concept of the Laffer curve was originally created in relation to the concept of the total tax burden, that is, the entire mass of tax deductions. Further, we adhere to precisely this understanding of the problem and, therefore, we will look for Laffer points for the average macroeconomic indicator of the tax burden. By the latter, we mean the share of tax revenues in the country's consolidated budget in the gross domestic product (GDP).

Our study is based on the assumption that the volume of production X, as reflected by the value of GDP, depends on the level of the tax burden

where T is the sum of tax revenues to the country's budget.

The dependence X (q) is approximated by a nonlinear function, the parameters of which are to be quantified. The identification of the function X (q) will allow the calculation of the Laffer points. In this case, we will distinguish Laffer points of the first and second kind. Let us give the corresponding definitions.

A Laffer point of the first kind is a point q * at which the production curve X = X (q) reaches a local maximum, i.e., when the following conditions are satisfied:

dX (q *) / dq = 0; d2X (q *) / dq 2<0.

A Laffer point of the second kind is a point q ** at which the fiscal curve T = T (q) reaches a local maximum, i.e., when the following conditions are satisfied:

dT (q **) / dq = 0; d2T (q **) / dq 2<0.

Economically, the Laffer point of the first kind means that limit of the tax burden at which the production system does not go into recession. The Laffer point of the second kind shows the magnitude of the tax burden, beyond which it becomes impossible to increase the mass of tax revenues.

The identification of the two Laffer points and their comparison with the actual tax burden makes it possible to assess the efficiency of the country's tax system and the directions for its optimization. Let's consider some approaches by which the task can be solved.

2.2 Economic methods for assessing the effectiveness of fiscal policy

In the general case, the problem posed can be solved by econometric methods, which are based on the postulate that the volume of production depends nonlinearly on the magnitude of the tax burden. In this case, the volume of GDP can be approximated by a polynomial regression of the following form:

where b i - parameters subject to statistical evaluation based on retrospective time series.

Considering formula (1) and the amount of taxes:

you can write the following ratio:

To carry out the appropriate calculations, the entire information array must be represented by dynamic series of two "primary" indicators - X and T. Knowing these values, using formula (2), it is possible to calculate a retrospective series for such a "secondary" indicator as q. Further, as a result of computational experiments, the polynomial (1) of the corresponding degree is found. It is desirable that it be a quadratic or, in extreme cases, a cubic function, since a higher order of the polynomial will subsequently complicate the search for Laffer points.

Taking into account the specifics of series smoothing operations, econometric models of type (1) have a number of obvious features. First, to obtain the values of the parameters b i, it is necessary to have sufficiently long and "good" in the statistical sense time series. Second, the parameters b i are constant over time, which in some cases leads to the invariability of the values of the Laffer points. This is not entirely legitimate, since it would be more logical to assume that Laffer points are quantities "floating" in time.

Commenting on the approach proposed above, which is based on a primitive polynomial approximation of the process of economic growth by a tax function (1), one should immediately make a reservation: in this case, a purely technical, instrumental problem is solved without taking into account intrasystem economic relations. There is no explicit modeling of the functional properties of the system, but they are indirectly captured by dependence (1). At the same time, although the functional dependence (1) itself is nonlinear, regression (1), on the contrary, is linear with respect to the parameters included in it and, therefore, no special technical difficulties arise in its identification. This is one of the essential advantages of the proposed model scheme.

2.3 Analytical methods for assessing the effectiveness of fiscal policyandki

Taking into account that the retrospective time series for the Russian economy have not yet been formed, which are sufficient to carry out correct econometric calculations, it is possible to use other methods of assessing the effectiveness of fiscal policy. These alternative approaches include methods of point-by-piece approximation of the analyzed process using a power function, which are fundamentally different from econometric methods based on interval approximation. In this case, for each reporting point, its own function X = X (q) is constructed with the corresponding values of its parameters. Since the number of function parameters can be more than one, then for their unambiguous assessment it is necessary to use additional information about the increments of variables over time. Taking into account the nonlinearity of the relationship between the volume of production and the level of the tax burden, a quadratic polynomial should be taken as an approximating function. Two calculation options are possible here: generalized three-parameter and simplified two-parameter. Let's consider them in more detail.

1. Three-parameter method. This method is based on the approximation of the process of economic growth by a three-parameter quadratic function, where the level of the tax burden acts as an argument:

where a, b and g are parameters to be estimated.

Then, in accordance with (2), the amount of tax revenues is determined as follows:

At each moment in time, the volume of GDP depends on the level of the tax burden, and the nature of this dependence is given by formula (4). However, for an unambiguous determination of the three parameters a, b, and g, relation (4) is insufficient, and therefore it is necessary to compose two more equations including these parameters. Such equations can be written down by passing from functions (4) and (5) to their differentials:

In passing from (4) and (5) to relations (6) and (7), we used the assumption that the differentials of the variables X and q are satisfactorily approximated by finite differences: dX ~ D X; dT ~ D T; dq ~ D q. This assumption is traditional for computational mathematics and for the case under consideration seems to be quite legitimate. Then, in applied calculations, the indicators D X, D T and D q mean the increments of the corresponding values for one time interval (year) between two reporting points, i.e.

where t is the index of the time (year).

Thus, equation (4) describes "point" economic growth, that is, at a specific point in time t, while equations (6) and (7) reproduce the "interval" growth of production and tax revenues for the period between the current (t) and subsequent (t + 1) reporting points. In accordance with this approach, Eqs. (4) and (5) define families of production and fiscal curves, and relations (6) and (7) fix their curvature, thereby making it possible to choose the required functional dependencies from the designated families.

Such a calculation scheme is based on the construction of the system of equations (4), (6) and (7) and its solution with respect to the parameters a, b and g, which makes it possible to characterize this scheme as analytical or algebraic. The solution of system (4), (6), (7) gives the following formulas for the estimated parameters:

The identification of the parameters of functions (4) and (5) makes it possible to determine the Laffer points in an elementary way. Moreover, the Laffer point of the first kind q *, when dX / dq = 0, is determined by the formula

and the Laffer point of the second kind q **, when d2T / dq 2 = 0, is found by solving the following quadratic equation

and as a result is calculated by the formula

An additional study of the properties of functions (4) and (5) will make it possible to determine whether the found stationary points are Laffer points. If the stationary points turn out to be points of a local minimum or their values go beyond the range of admissible values, then there are no Laffer points.

An alternative to the considered three-parameter method can be an approach based on the use of a truncated polynomial of the third degree as a production function:

In this case, the number of parameters does not change, remaining equal to three. In this case, the procedure for finding Laffer points is corrected taking into account the initial cubic dependence, and stationary points for the fiscal curve will be found as a result of solving the cubic equation. It is clear that such an algorithm can generate two Laffer points of the second kind. In our opinion, due to the greater unambiguity and clarity in practice, the first, basic version of the three-parameter method should be used.

It should be noted that the analytical method for assessing the effectiveness of fiscal policy makes it possible to use functional dependencies with the number of parameters not exceeding three. A larger number of parameters requires the addition of additional equations to the basic system (4), (6), (7), which is impossible due to the narrow formulation of the original problem.

2. Two-parameter method. This method is based on the approximation of the economic growth process by a truncated quadratic function, which includes only two parameters:

Then the sum of fiscal revenues is

An additional restriction imposed on the functional properties of the production system is given by an equation similar to (6):

The constructed system of equations (14), (16) is sufficient for finding the parameters b and g. As in the case of using the three-parameter method, equation (14) reproduces the "point" properties of the production system, and equation (16) - "interval". In this case, there is no auxiliary equation that sets the dynamic properties of the fiscal system; By default, it is assumed that the amount of taxes received is completely determined by the activity of the production system and the level of fiscal pressure.

Formulas for estimating parameters based on solution (14), (16) have the form

Laffer points of the first and second kind are determined from (14) and (15) according to the corresponding formulas:

Analysis of the second-order conditions shows the following: for stationary points (19) and (20) to be really Laffer points, it is necessary and sufficient to satisfy two inequalities: b> 0 and g<0.

Chapter 3. Features of fiscal policy in Russia

In a market economy, there are certain mechanisms of self-organization and self-regulation, which come into effect immediately as soon as negative processes in the economy are revealed. They are called built-in stabilizers. The self-regulation principle that underlies these stabilizers is similar to the principle on which the autopilot or refrigerator thermostat is built. When the autopilot is on, it maintains the aircraft's heading automatically based on feedback signals. Any deviation from the set course due to such signals will be corrected by the control device. Economic stabilizers work in a similar way, due to which the automatic changes in tax revenues are carried out; payments of social benefits, in particular for unemployment; various state programs of assistance to the population, etc.

How does the self-regulation, or automatic change, of tax receipts take place? A progressive taxation system is built into the economic system, which determines the tax depending on income. As income rises, tax rates progressively increase, which are approved by the government in advance. When income increases or decreases, taxes are automatically raised or lowered without any intervention by the government and its management and control bodies. Such a built-in stabilization system for levying taxes is quite sensitive to changes in the economic environment: during a period of recession and depression, when the incomes of the population and enterprises are falling, tax revenues are automatically reduced. On the contrary, during periods of inflation and boom, nominal income rises, and therefore taxes are automatically raised.

There are different points of view in the economic literature on this issue. A hundred years ago, many economists argued for the stability of tax collections, because, in their opinion, it contributes to the stability of the economic situation of society. Currently, there are many economists who adhere to the opposite point of view and even declare that the objective principles underlying the built-in stabilizer should be preferred to the incompetent intervention of government bodies, which are often guided by subjective opinions, inclinations, preferences. At the same time, there is also an opinion that it is impossible to rely entirely on automatic stabilizers, since in certain situations they may inadequately respond to the latter, and therefore need to be regulated by the state.

Payments of benefits for social assistance to the unemployed, the poor, large families, veterans and other categories of citizens, as well as the state program to support farmers, the agro-industrial complex are also carried out on the basis of built-in stabilizers, because most of these payments are realized through taxes. And taxes, as you know, grow progressively along with the incomes of the population and enterprises. The higher these incomes, the more tax deductions to the fund to help the unemployed, pensioners, the poor and other categories of those in need of state assistance are made by enterprises and their employees.

Despite the significant role of built-in stabilizers, they cannot completely overcome any fluctuations in the economy. With significant fluctuations in the economic system, more powerful government regulators are included in the form of discretionary fiscal and monetary policies.

Discretionary fiscal policy also includes additional social spending. Although unemployment benefits, pensions, benefits to the poor and other categories of the needy are regulated with the help of built-in stabilizers (increase or decrease as income-dependent taxes are received), nevertheless, the government can implement special programs to help these categories of citizens in difficult times of economic development. ...

Thus, we come to the conclusion that an effective fiscal policy should be based, on the one hand, on self-regulation mechanisms embedded in the economic system, and on the other, on careful, careful discretionary regulation of the economic system by the state and its governing bodies. Consequently, the self-organizing regulators of the economy must function in concert with the conscious regulation organized by the state.

Generally speaking, the entire experience of the development of a market economy, especially of our century, testifies to the fact that in the development of the economy and other systems of social life, self-organization should keep pace with the organization, i.e. conscious regulation of economic processes by the state.

However, such regulation is not easy to achieve. To begin with, it is necessary to timely forecast recession or inflation before they have started yet. It is hardly advisable to rely on statistical data in such forecasts, since statistics summarize the past, and therefore it is difficult to determine the trends of future development from them. A more reliable tool for predicting future GDP levels is the monthly leading indicators analysis, which is often referred to by policymakers in developed countries. This index contains 11 variables that characterize the current state of the economy, including the average working week, new orders for consumer goods, stock market prices, changes in orders for durable goods, changes in the prices of certain types of raw materials, etc. It is clear that if there is, for example, a reduction in the working week in the manufacturing industry, a decrease in orders for raw materials, a decrease in orders for consumer goods, then with a certain probability one can expect a decline in production in the future.

However, it is difficult to pinpoint the exact time when the recession will occur. But even in these conditions, it will take a long time before the government takes appropriate measures. In addition, in the interests of the upcoming electoral campaign, it can implement such populist measures that will not improve, but only worsen the economic situation. All such non-economic factors will run counter to the needs of achieving production stability.

3.1 Advantages and Disadvantages of Fiscal Policy

The advantages of fiscal policy include:

1. Multiplier effect. All fiscal policy instruments, as we have seen, have a multiplier effect on the value of equilibrium aggregate output.

2. Absence of external lag (delay). External lag is the period of time between the decision to change the policy and the appearance of the first results of its change. When the government decides to change the instruments of fiscal policy, and these measures take effect, the result of their impact on the economy manifests itself rather quickly.

3. The presence of automatic stabilizers. Since these stabilizers are built-in, the government does not need to take special measures to stabilize the economy. Stabilization (smoothing of cyclical fluctuations in the economy) occurs automatically.

Disadvantages of fiscal policy:

1. The crowding out effect. The economic meaning of this effect is as follows: an increase in budget expenditures during a recession (an increase in government purchases and / or transfers) and / or a decrease in budget revenues (taxes) leads to a multiplicative increase in total income, which increases the demand for money and raises the interest rate on money. market (loan price). And since loans, first of all, are taken by firms, the rise in the cost of loans leads to a reduction in private investment, i.e. to "crowding out" part of the investment costs of firms, which leads to a reduction in the value of output. Thus, a part of the total volume of production is “crowded out” (underproduced) due to the reduction in the value of private investment spending as a result of the increase in the interest rate due to the government's stimulating fiscal policy.

2. The presence of an internal lag. Internal lag is the period of time between the need to change the policy and the decision to change it. Decisions to change the instruments of fiscal policy are made by the government, but their introduction is impossible without discussion and approval of these decisions by the legislative authority (Parliament, Congress, State Duma, etc.), i.e. giving them the force of law. These discussions and agreements can take a long time. In addition, they only take effect from the next fiscal year, further increasing the lag. During this period of time, the situation in the economy may change. So, if initially there was a recession in the economy, and measures of stimulating fiscal policy were developed, then at the moment they begin to operate in the economy, an upturn may already begin. As a result, additional stimulus can lead the economy to overheat and provoke inflation, i.e. have a destabilizing effect on the economy. Conversely, constraining fiscal policy measures developed during the boom period, due to the presence of a prolonged internal lag, may exacerbate the recession.

3. Uncertainty. This disadvantage is typical not only for fiscal, but also for monetary policy. Uncertainty concerns:

· Problems of identifying the economic situation It is often difficult to accurately determine, for example, the moment when the period of recession ends and recovery begins, or the moment when the recovery turns into overheating, etc. Meanwhile, since at different phases of the cycle it is necessary to apply different types of policies (stimulating or restraining), an error in determining the economic situation and the choice of the type of economic policy, based on such an assessment, can lead to destabilization of the economy;

...

3.5.1. The concept and content of fiscal policy. Types and instruments of fiscal policy

Fiscal policy Is a policy that involves the use of the government's capabilities: to collect taxes and spend state budget funds to regulate the level in conditions of business activity and to solve various social problems.

This is the state policy in the field of government spending and taxes.

This policy are carried out by the legislature since they control taxation and the state budget.

The main objectives of fiscal policy:

1. Smoothing fluctuations in the economic cycle.

2. Stabilization of economic growth rates.

3. Achieving a high level of employment.

4. Decrease in inflation rates.

Basic tools:

1. Government spending.

2. Taxes.

Fiscal policy affects the national economy through commodity markets. Changes in government spending and taxes are reflected in aggregate demand and, through it, affect macroeconomic goals.

The main task of fiscal policy is to balance the macroeconomic system. In general, fiscal policy is aimed at saving full employment and producing a non-inflationary gross national product. Typically, fiscal policy is carried out in the definition of discretionary and non-discretionary instruments (in the form of a "fiscal mixture") and gives the maximum effect in the short term.

Fiscal policy there are two types:

Discretionary

This is an active policy.

This is a deliberate manipulation of taxes and government spending. It is carried out in the long term.

Basic tools:

1. State employment program(financial labor exchanges, placement of government orders in private enterprises).

2. Development of various social programs.

3. Public works program(production of public goods - public transport, communications, improvement of parks, squares).

Change in tax rates- the main tool.

Politics built-in stabilizers passive policy. It is based on the fact that tax revenues and a significant portion of government spending automatically cause a change in the relative level of taxes and budget expenditures.

Basic tools:

Income tax;

Unemployment benefits;

Social payments;

Indexation of income.

During the recession, stimulating fiscal policy(fiscal expansion) - consists of:

Increased government spending;

Reducing taxes;

Combining increased government spending with tax cuts.

This leads to deficit financing, but provides a reduction in the decline in production.

In the face of inflation deterrent policy.

It's called fiscal restriction:

Reducing government spending;

Increase in taxes;

Combining government spending cuts with rising taxation.

This policy focuses on a positive budget balance, which causes a reduction in production.

Built-in stabilizers policy(passive) - an economic mechanism that automatically reacts to changes in the economic situation without the need to take any steps on the part of the government.

The main stabilizers are changes in tax revenues.

During a boom, tax revenue automatically increases, reducing purchasing power and curbing economic growth.

During an economic downturn, tax revenues are reduced, and there is a gradual increase in purchasing power, restraining the economic downturn.

Fiscal policy

One of the possible expected results of fiscal policy: aggregate demand increases, which leads to economic recovery

Fiscal (tax and budget) policy(eng. Fiscal policy) - government policy, one of the main methods of state intervention in the economy in order to reduce fluctuations in business cycles and ensure a stable economic system in the short term. The main instruments of fiscal policy are revenues and expenditures of the state budget, that is: taxes, transfers and government purchases of goods and services. Fiscal policy in the country is carried out by the government of the state.

Main objectives of fiscal policy

Fiscal policy, in addition to monetary policy, is an extremely important component of the work of the state as a distributor in the economy. As an instrument of government, fiscal policy has several objectives. The first goal is to stabilize the level of gross domestic product and, accordingly, aggregate demand. Then, the state needs to maintain macroeconomic equilibrium, which can only be successful if all resources in the economy are effectively used. As a result, together with the smoothing of the parameters of the state budget, the general level of prices will also stabilize. Both aggregate demand and aggregate supply fall under the influence of fiscal policy.

Impact of fiscal policy

On aggregate demand

The main parameters of fiscal policy are public procurement (ref. G), taxes (ref. Tx) and transfers (ref. Tr). The difference between taxes and transfers is called net taxes(ref. T). All these variables are included in the aggregate demand (ref. AD) :

Consumer expenses ( C) are divided into two groups: autonomous from the size of household income and constituting a certain share of disposable income ( Yd). The latter depend on maximum consumption rate(ref. mpc), that is, by how much the expenses increase with each additional unit of income. Thus,

, where

At the same time, disposable income is the difference between total output and net taxes:

It follows from this that taxes, transfers and government procurement are variables of aggregate demand:

Therefore, it is obvious that when any parameter of fiscal policy changes, the entire function of aggregate demand changes. The impact of these tools can also be expressed using economic multipliers.

On the aggregate supply

The offer of all goods and services is provided by firms, important macroeconomic agents. Aggregate supply is influenced by taxes and transfers; government spending has little impact on supply. Firms take taxes as regular costs per unit of output, which forces them to reduce the supply of their goods. Transfers, on the other hand, are welcomed by entrepreneurs because they can increase the supply of services they provide. When a large number of firms pursue the same policy of supplying goods, the aggregate supply of the entire economy in question changes. Thus, the state can influence the state of the economy through the correct introduction of taxes and transfers.

Fiscal policy and the state of the country's economy

Business Cycles in Macroeconomics

Abstract image of business cycles in economics

In any economic system, cyclical fluctuations can be distinguished: ups and downs in the economy caused by shocks in aggregate demand and aggregate supply and called business cycles, economic or business cycles. The phases of business cycles are boom, peak, recession (or recession) and bottom, that is, a crisis. The deepest recession is called depression... Often, these fluctuations in business activity are unpredictable and irregular. There are also different business cycles in terms of period, frequency and size. The reasons for such cycles can be very different: from wars, revolutions, technological process and investor behavior to, for example, the number of magnetic storms per year and the rationality of macroeconomic agents. In general, this unstable behavior of the economy is due to the constant imbalance between aggregate supply and demand, total costs and production volumes. The theory of business cycles gained great popularity thanks to the American economist William Nordhaus. People such as Robert Lucas, the Norwegian economist Finn Kidland, and the American Edward Prescott have made major contributions to the development of business cycle theory.

As a rule, the policy of the state depends on the state of the economy of a given country, that is, on what phase of the cycle the country is in: an upswing or a recession. If the country is in recession, then the authorities conduct stimulating economic policy to take the country from the bottom. If the country is experiencing an upturn, then the government conducts restraining economic policy in order to prevent high inflation rates in the country.

Incentive policy

If the country is experiencing a depression or is in the stage of an economic crisis, then the state may decide to conduct stimulating fiscal policy... In this case, the government needs to stimulate either aggregate demand, or supply, or both. For this, other things being equal, the state increases the size of its purchases of goods and services, cuts taxes and increases transfers, if possible. Any of these changes will lead to an increase in aggregate output, which automatically increases aggregate demand and the parameters of the system of national accounts. An incentive fiscal policy leads to an increase in output in most cases.

Containment policy

The authorities are conducting restrictive fiscal policy in the event of a short-term "overheating of the economy". In this case, the government is implementing measures that are directly opposite to those carried out with a stimulating economic policy. The government cuts its spending and transfers and increases taxes, which leads to a reduction in both aggregate demand and, possibly, aggregate supply. Such a policy is regularly carried out by the governments of several countries in order to slow down the rate of inflation or avoid its high rates in the event of an economic boom.

Automatic and discretionary

Economists also subdivide fiscal policy into the next two types: discretionary and automatic... Discretionary policies are officially declared by the state. At the same time, the state changes the values of the parameters of fiscal policy: government purchases increase or decrease, the tax rate, the size of transfer payments and other similar variables change. Automatic policy is understood as the work of "built-in stabilizers". These stabilizers are such as income tax percentage, indirect taxes, various transfer benefits. The size of payments is automatically changed in case of any situation in the economy. For example, a housewife who lost her fortune during the war will pay the same percentage, but on a lower income, therefore, the amount of taxes for her will automatically decrease.

Disadvantages of fiscal policy

Crowding-out effect

This effect, also known as crowding out effect manifests itself with an increase in government purchases of goods and services in order to stimulate the economy. It is recognized as a major flaw in fiscal policy by many economists, especially representatives of monetarism. When the state increases its expenses, he needs money in the financial market. Thus, in the market for borrowed funds the demand for money is growing... This leads to the fact that banks raise prices for their loans, that is increase their interest rate for reasons such as the motive for maximizing profits or simply lack of money for lending. Investors and entrepreneurs of firms do not like an increase in the interest rate, especially for beginners, when the company does not have its own "start-up" money capital. As a result, due to high bank interest rates, investors have to borrow less and less, which leads to decrease in investment in the country's economy... Thus, an incentive fiscal policy is not always effective, especially if the country does not develop properly business of any kind. The effect of "Crowding-in" is also possible, that is, an increase in investment due to a reduction in government spending.

Other disadvantages

Notes (edit)

David N. Weil"Fiscal Policy" (English) // The Concise Encyclopedia of Economics: Article.
Yandex. Dictionaries. "Fiscal Policy Determination"
Matveeva T. Yu. 12.1 Objectives and instruments of fiscal policy // Introduction to macroeconomics. - "Publishing House of the State University - Higher School of Economics", 2007. - P. 446 - 447. - 511 p. - 3000 copies. - ISBN 978-5-7598-0611-0
Grady, P."Fiscal Policy" (English) // The Canadian Encyclopedia: Article.
Matveeva T. Yu. A course of lectures on macroeconomics for ICEF. - "Publishing House of the State University - Higher School of Economics", 2004. - P. 247 - 251. - 444 p.
Matveeva T. Yu. 4.4 The economic cycle, its phases, causes and indicators // Introduction to macroeconomics. - "Publishing House of the State University - Higher School of Economics", 2007. - pp. 216 - 219. - 511 p. - 3000 copies. - ISBN 978-5-7598-0611-0
Oleg Zamulin, "Real business cycles: their role in the history of macroeconomic thought."
Yandex. Dictionaries ", Definition of economic cycles
Harper College Material Fiscal Policy: Lecture.
Investopedia Definition of Crowding-out Effect: Article.
Edge, K. Fiscal Policy and Budget Outcomes: Article.
Matveeva T. Yu. 12.3 Types of fiscal policy // Introduction to macroeconomics. - "Publishing House of the State University - Higher School of Economics", 2007. - pp. 458-459. - 511 p. - 3000 copies. - ISBN 978-5-7598-0611-0

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See what "Fiscal Policy" is in other dictionaries:

Fiscal policy- government regulation of business activity through measures in the field of budget management, taxes and other financial opportunities. There are two types of fiscal policy: discretionary and automatic. Fiscal policy ... ... Financial vocabulary

Fiscal policy represents the measures that the government uses to influence the economic environment by changing the volume of government spending and taxation. This is why fiscal policy is also called fiscal policy.

State expenditures are an integral part of the state budget, which is why they must be effective and ensure quantitative and qualitative national economic growth. This means that the fiscal policy pursued by the state must meet the following social goals:

1) smoothing out fluctuations in the economic cycle;

2) stabilization of economic growth;

3) achieving full employment of resources (first of all, solving the problem of cyclical unemployment);

4) stabilization of the price level (achievement of moderate inflation rates).

Fiscal policy is a policy of government regulation, primarily of aggregate demand. In this case, the regulation of the economy occurs by influencing the value of total expenditures. However, some fiscal policy instruments can be used to influence the aggregate supply through the influence on the level of business activity.

Fiscal policy instruments are the expenditures and revenues of the state budget, namely: 1) public procurement; 2) taxes; 3) transfers.

The impact of fiscal policy instruments on aggregate demand is uneven. From the aggregate demand formula: AD = C + I + G + Xn(where AD is aggregate demand, C is consumer spending, I is investment spending, G is government spending, Xn is the country's net export) it follows that state procurements are its most important component, therefore, their change has a direct impact on aggregate demand. At the same time, taxes and transfers have an indirect effect on aggregate demand, changing the amount of consumer spending (C) and investment spending (I). The growth of government purchases increases the aggregate demand, and their reduction leads to its decrease.

Height transfers also increases aggregate demand. On the one hand, with an increase in social transfer payments, the personal income of households increases, and, consequently, other things being equal, disposable income increases and consumer spending increases. On the other hand, an increase in transfer payments to firms (subsidies) increases the possibilities of their internal financing, the possibility of expanding production, which leads to an increase in investment costs. Conversely, a reduction in transfers reduces aggregate demand.

Height taxes acts in the opposite direction. An increase in taxes leads to a decrease in both consumption (since disposable income decreases) and investment costs (since retained earnings, which are the source of net investment, decrease) and, consequently, to a decrease in aggregate demand. Accordingly, tax cuts increase aggregate demand and shift the AD curve to the right, which leads to an increase in real GNP.

Let's define the impact of fiscal policy on the aggregate supply. The offer of all goods and services is provided by firms, important macroeconomic agents. Aggregate supply is influenced by taxes and transfers; government spending has little impact on supply. Firms take taxes as regular costs per unit of output, which forces them to reduce the supply of their goods. Transfers, on the other hand, are welcomed by entrepreneurs because they can increase the supply of services they provide. When a large number of firms pursue the same policy of supplying goods, the aggregate supply of the entire economy in question changes. Thus, the state can influence the state of the economy through the correct introduction of taxes and transfers.

It follows from a simple Keynesian model (the Keynesian Cross model) that all fiscal policy instruments (government procurement, taxes, and transfers) have a multiplier effect on the economy, therefore, according to Keynes and his followers, the government should regulate the economy using instruments precisely fiscal policy, and above all, by changing the amount of government purchases, since they have the greatest multiplier effect.

In the fiscal policy of the government of developed countries, the mechanism of deliberate manipulation of the legislative power in the field of taxation and government spending is widely used to influence the level of economic activity of economic entities.

Fiscal policy instruments can be used in different ways depending on the phase of the economic cycle. In this regard, distinguish two types of fiscal policy:

1) incentive policy- if the country is experiencing a depression or is in the stage of an economic crisis, then the state may decide to pursue a stimulating fiscal policy. In this case, the government needs to stimulate either aggregate demand, or supply, or both. For this, other things being equal, the state increases the size of its purchases of goods and services, cuts taxes and increases transfers, if possible. Any of these changes will lead to an increase in aggregate output, which automatically increases aggregate demand. Stimulating fiscal policy in most cases leads to an increase in the volume of production of the country.

2) deterrent policy- used in case of a boom (when the economy overheats). In this case, the government is implementing measures that are directly opposite to those carried out with a stimulating economic policy. The government cuts its spending and transfers and increases taxes, which leads to a reduction in both aggregate demand and, possibly, aggregate supply. Such a policy is regularly carried out by the governments of several countries in order to slow down the rate of inflation or avoid its high rates in the event of an economic boom.

To achieve an economic effect in the choice of a particular policy, the time factor is of great importance. The fact is that politics gives the expected result precisely during periods of recession or during periods of growth. But it is difficult to determine the time of the decline or the time of the rise, since there is a time lag between the decline and its manifestation. To overcome these difficulties, Western practice uses discretionary and automatic (non-discretionary) fiscal policy... The essence discretionary fiscal policy comes down to a legislative (official) change by the government in the amount of government purchases, taxes and transfers in order to stabilize the economy. Automatic fiscal policy implies an automatic change in the level of government projects; automatic change of taxes and fees, and is also associated with the action of built-in (automatic) stabilizers.

Built-in (or automatic) stabilizers are instruments, the value of which does not change, but the very presence of which (built into the economic system) automatically stabilizes the economy, stimulating business activity during a downturn and holding it back when overheating. Automatic stabilizers include: 1) income tax (which includes both household income tax and corporate income tax); 2) indirect taxes (first of all, value added tax); 3) unemployment benefits; 4) benefits for poverty.

Tax revenues are automatically reduced during a downturn in production. As income and income taxes are levied on a progressive scale, the tax press becomes easier and the economic downturn softens. Increasing unemployment during a recession automatically leads to an increase in unemployment benefits and other social benefits, which softens the drop in aggregate demand.

During a period of economic recovery, tax revenues automatically increase due to the progressiveness of taxation. Unemployment benefits are automatically reduced. The tax press is intensifying, which has a constraining effect on economic growth. Consequently, governments in modern conditions, thanks to an objective assessment of the actual state in the development of the country's economy, skillful and flexible changes in the use of fiscal policy mechanisms, are able to actively influence both economic growth and the achievement of success in the implementation of the principle of social justice.

The advantages of fiscal policy include:

1. Multiplier effect. Like investments, government spending has a multiplier effect, continuing the chain of secondary, tertiary, etc. consumer spending, and also lead to a multiplier effect of the investment itself. The government spending multiplier shows the increment in GNP as a result of the increment in government spending spent on the purchase of goods and services:

where: KG - government spending multiplier;

DWNP is the increment in the gross national product;

DG is the increment in government spending.

The government spending multiplier can also be determined using the marginal propensity to consume — MPC. As a result, the multiplier of government spending will be equal to:

KG = DVNP / DG = 1 / MPC,

Therefore, DVNP = 1 / (1 – MPC) × DG = KG × DG.

This means that if the state increases the volume of its expenses by a certain amount without increasing the budget revenue items, then this is exactly the increase in income. Therefore, a change in the amount of government spending causes a change in income proportional to the change in the amount of spending.

2. No external lag(delays). External lag is the period of time between the decision to change the policy and the appearance of the first results of its change. When the government decides to change the instruments of fiscal policy, and these measures take effect, the result of their impact on the economy manifests itself rather quickly. An external lag is typical for monetary policy with a complex transmission mechanism (money transmission mechanism).

3. Availability of automatic stabilizers... Since these stabilizers are built-in, the government does not need to take special measures to stabilize the economy. Stabilization (smoothing of cyclical fluctuations in the economy) occurs automatically.

The disadvantages of fiscal policy are:

1. Crowding-out effect. The economic meaning of this effect is as follows: an increase in budget expenditures during a recession (an increase in government purchases and / or transfers) and / or a decrease in budget revenues (taxes) leads to a multiplicative increase in total income, which increases the demand for money and raises the interest rate on money. market (loan price). And since loans, first of all, are taken by firms, the rise in the cost of loans leads to a reduction in private investment, i.e. to the "displacement" of part of the investment costs of firms, which provokes a reduction in the value of output. Thus, a part of the total volume of production turns out to be “crowded out” (underproduced) due to the reduction in the value of private investment expenditures as a result of an increase in the interest rate caused by the government's stimulating fiscal policy.

2. The presence of an internal lag. Internal lag is the period of time between the need to change the policy and the decision to change it. Decisions to change the instruments of fiscal policy are made by the government, but their introduction is impossible without discussion and approval of these decisions by the legislative authority (Parliament, Congress, State Duma, etc.), i.e. giving them the force of law. These discussions and agreements can take a long time. In addition, they only take effect from the next fiscal year, further increasing the lag. During this period of time, the situation in the economy may change. So, if initially there was a recession in the economy, and measures of stimulating fiscal policy were developed, then at the moment they begin to operate in the economy, an upturn may already begin. As a result, additional stimulus can lead the economy to overheat and provoke inflation, i.e. have a destabilizing effect. Conversely, constraining fiscal policy measures developed during the boom period, due to the presence of a prolonged internal lag, may exacerbate the recession.

3. Uncertainty. This disadvantage is typical not only for fiscal, but also for monetary policy. Uncertainty concerns:

Problems of identifying the economic situation. It is often difficult to pinpoint the exact moment when the recession ends and the recovery begins, or the moment when the recovery turns into overheating, etc. Meanwhile, since at different phases of the cycle it is necessary to apply different types of policies (stimulating or restraining), an error in determining the economic situation and the choice of the type of economic policy, based on such an assessment, can lead to destabilization of the economy;

Problems of exactly how much the instruments of state policy should be changed in each given economic situation. Even if the economic situation is defined correctly, it is difficult to determine exactly how much to increase government purchases or reduce taxes in order to ensure the recovery in the economy and achieve the potential volume of output, but not exceed it, which can provoke overheating of the economy and accelerated inflation. And, conversely, when conducting a restrictive fiscal policy, how not to bring the economy into a state of depression.

4. Budget deficit... Opponents of Keynesian methods of economic regulation are monetarists, supporters of supply-side economics and rational expectations theory - i.e. representatives of the neoclassical direction in economic theory consider the state budget deficit one of the most important shortcomings of fiscal policy. Indeed, an increase in government purchases and transfers, i.e. budget expenditures, and tax cuts, i.e. budget revenues, which leads to an increase in the state budget deficit. It is no coincidence that the recipes for state regulation of the economy that Keynes proposed were called “deficit financing”.

Thus, fiscal (fiscal) policy is a set of government measures to change government spending and taxation, aimed at ensuring full employment and the production of equilibrium GNP.

conclusions

1. The formation of monopolies, the lack of interest of the market in the production of public goods, the preservation of the environment, the development of fundamental science, inequality in the distribution of income, unemployment, inflation, crises - all this led to the strengthening of the role of the state in the economy in the twentieth century.

The purpose of the state's activity in a market economy is to mitigate the negative consequences of the market mechanism. Its main functions are: creating the legal framework for private business, demonopolization, redistribution of income, combating unemployment, inflation, cyclical development, etc. Negative external effects lead to excessive, and positive external effects lead to insufficient supply of resources in the industries where these effects occur. By introducing special taxes, various kinds of sanctions or subsidies, the state eliminates these distortions in the distribution of resources.

2. Finance in a broad sense is a system of relations in society regarding the formation, distribution and use of funds (in the spheres: public (public) finance, credit system, branches of the reproduction process, secondary financial market, international financial relations) in order to be fulfilled by the state their functions and tasks, providing conditions for expanded reproduction. Finance in the narrow sense is considered only state (public) finance - a system of monetary relations regarding the formation and use of funds necessary for the state to perform its functions.

The financial system is a complex of measures for managing financial relations, including funds of financial resources of centralized and decentralized purpose, the relationship between them, as well as the management subsystem - state and municipal financial bodies and financial services of enterprises. The financial system provides an effective comprehensive implementation of all functions of finance, allows you to get the maximum integration effect from their interaction, the most complete and efficient use of financial relations for the implementation of the economic policy of the state.

3. The state budget is a balance (estimate) of income and expenditure of the state, its financial plan. The state budget of the Russian Federation includes the federal budget and the budgets of state extra-budgetary funds of the Russian Federation, the budgets of the constituent entities of the Federation and the budgets of territorial state extra-budgetary funds, as well as local budgets. Relations between individual budgets are based on the principle of budgetary federalism, according to which the budget of each level is assigned its own income and expenses, which must be financed from this budget. According to the economic content, government expenditures are divided into: government purchases of goods and services, transfer payments, social payments and government debt service expenses.

In modern conditions, the budget deficit has become typical for the state budget of most countries - the excess of government spending over government revenues. The budget deficit can be the result of an unfavorable economic environment or the result of a purposefully pursued budget policy. Distinguish between a structural budget deficit - a deficit in full employment and a cyclical deficit - a deficit in conditions when unemployment exceeds the natural level. Financing the budget deficit by issuing money and loans at the central bank leads to an increase in money in circulation, higher prices, inflation. Covering the budget deficit with loans in the private sector creates a crowding-out effect - a reduction in private investment as a result of the issuance of government securities.

A persistent budget deficit leads to the emergence of public debt (internal and external). Domestic debt is the funds that the state borrowed from within the country. Significant government debt negatively affects the rate of economic growth, the cost of servicing government debt increases the budget deficit. External public debt represents loans and credits attracted from legal entities and individuals of foreign states, international financial organizations, for which the country's debt obligations as a borrower or guarantor of repayment of loans (credits) by other borrowers, denominated in foreign currency, arise. This type of public debt is paid off by proceeds from the export of goods, which can also adversely affect the pace of economic development.

4. The main source of income - taxes - mandatory payments of individuals and legal entities to the state budget. The main functions of taxes are: fiscal, redistributive, control, regulatory (stimulating) and reproduction. The principles of taxation: universality, obligation, stability, neutrality of tax systems, fairness, simplicity of calculation and equal distribution of the tax burden. Taxes are divided into direct and indirect taxes. Any tax includes the characteristics of the subject and object of taxation, tax rate, source of tax, tax benefits, tax sanctions. Depending on the nature of the change in the tax rate, proportional, progressive and regressive taxes are distinguished.

5. Fiscal policy is the measures that the government uses to influence the economic environment by changing the volume of government spending and taxation. This is why fiscal policy is also called fiscal policy.

It is based on the premise that changes in tax exemptions and government spending affect aggregate demand and, therefore, GNP, employment and prices. In the short term, tax cuts and increases in government spending have an increasing effect on aggregate demand, and conversely, tax increases and government spending cuts reduce aggregate demand. In the long run, fiscal policy can have a negative impact on economic growth. The peculiarity of fiscal policy is that all changes in taxes and government spending are reflected in the volume of GNP with a multiplier effect.

Changes in taxes and government spending can occur either automatically (without special legislative decisions) with the help of built-in stabilizers that maintain economic stability on the basis of self-regulation, or as a result of targeted government decisions (discretionary policy). Depending on the objectives pursued, fiscal policy can be stimulating or restrictive. Stimulus fiscal policy is aimed at expanding aggregate demand and involves lowering taxes and increasing government spending. The consequence of this policy is the budget deficit. Restraining fiscal policy is aimed at narrowing aggregate demand, involves increasing taxes and reducing government spending, and is accompanied by a decrease in the budget deficit or the appearance of a budget surplus. Although fiscal policy is an effective tool for state regulation of a market economy, it is characterized by some drawbacks that reduce its effectiveness. These include: crowding out, internal lag, uncertainty, and budget deficits.

12.2. THE STATE BUDGET.

12.4. STATE DEBT.

12.1. FINANCIAL SYSTEM OF THE STATE.

Finances (plural from Lat. Finanсia - order to pay) are funds of funds that arise in the process of social reproduction from the main economic entities and are used for national needs and the needs of social reproduction. Usually we are talking about:

Target funds of the state (national or centralized finance) and

· Decentralized finance of business entities (enterprises).

In the process of the formation and use of these funds of funds, financial relations arise. With the help of financial relations, the state carries out a direct redistribution of national income in order to stimulate the most effective economic process.

The financial system of the state is a system of economic relations associated with the formation and use of funds of funds intended to meet national needs and the needs of expanded reproduction, as well as institutions that manage and control the use of funds from these funds.

General government finance includes:

1. The budgetary system (state and local budgets).

2. State off-budget trust funds;

3. State loan;

4. State insurance funds

Tasks solved by the system of national finance:

Development of the production sector

Development of the social sphere (culture, sports, education, etc.)

· Provision of financial resources for the needs of defense, government, law enforcement.

In countries with a market economy, the production sector is developing and improving through self-financing, attracting credit and other resources. The state supports only priority sectors of the economy and is carried out in the following areas:

1. Development of industries and industries that ensure the development of scientific and technological progress.

2. Industries producing export or scarce products;

3. Development of industries and industries of national importance (energy, some extractive industries and agriculture)

12.2. THE STATE BUDGET.

State budget(from the English budget - a suitcase, a bag of money.) - the leading link in the financial system. Resources are constantly mobilized and spent through the budget.

The state budget is the main financial plan of the state for the current year, which has the force of law. Approved by the legislative authorities - parliaments.

The main functions of the state budget. The state budget of modern foreign countries performs the following main functions:

1 redistribution of national income. About 50% of GDP is redistributed through the state budget. The budget is widely used for:

· Intersectoral redistribution of financial resources. Thus, intersectoral proportions are improved and priority sectors of the economy are identified.

· Territorial redistribution of financial resources. Through the tax system, financial resources are withdrawn from regions where they are available in a relatively excessive amount and are sent to resource-deficient regions, thereby ensuring their development. As a rule, these are areas poor in natural resources or environmentally damaged, etc.

· Redistribution of income between different groups of the population through the tax system and the system of social transfers.

Using the budget, the state makes profound changes in the proportions that develop at the stages of production and the primary distribution of the national income.

2 state regulation and stimulation of the economy... The redistribution of national income to a large extent allows the implementation of the following function of the state budget - state regulation and stimulation of the economy.

3 financial support of social policy... The state budget has become a major source of funds for the reproduction of labor. With scientific and technological progress, the reproduction of the labor force is increasingly dependent on spending on education, health care, social insurance and security.

4 the implementation of all these functions is complemented by the implementation control over the education and use of the centralized fund of funds... It includes control over the observance of financial and economic legislation in the process of formation and use of monetary funds, assessment of the efficiency of financial and business operations and the feasibility of the expenses incurred.

NS The period during which the approved budget is in effect is called budget year.

Composition of the budget. In the broadest sense of the word, the budget is a balance sheet, in one side of which are all revenues, in the other - expenses. (vertical and horizontal budget composition)

Budget revenues - part of the centralized financial resources of the state necessary for the performance of its functions. The following main sources of budget revenues can be identified: taxes, government loans, income from the use of state property; income from privatization; grants or gifts; money issue.

1) The main method of redistributing national income is taxes, providing the predominant share of budget revenues. Thus, in the revenues of the central budget of various states, tax revenues are about 9/10. The share of taxes in the income of members of the federation and local budgets is much smaller. These budgets are formed at the expense of fixed (own revenues of the respective budgets) and regulatory (revenues transferred from a higher level of the budget system to a lower level) revenues.

2) The next budget revenues in terms of their financial value are government loans. The state resorts to this method in case of budget deficits, which are envisaged when drawing up the budget for the coming year. There are two ways to obtain government loans: 1) government loans received from individuals and legal entities by issuing securities on behalf of the state; 2) loans received from the central bank and other credit institutions. An increase in the volume of government lending operations leads to an increase in government debt. And it often leads to higher taxes. Its repayment, interest payments on it are carried out to a large extent due to tax payments or new credit operations. obtaining government loans from individual states or from international financial and credit institutions. Therefore, funds mobilized on the basis of government loans should be considered not as a source of budget revenues, but as a way to temporarily replenish the budget fund.

3) income from the use of state property;

4) income from privatization;

5) grants (gifts) from foreign governments or international organizations. Grants can be provided either to finance the implementation of a specific project, or simply to support the budget of friendly states experiencing difficulties. Grants are not considered a budget item and are shown in the revenue side, not below the line. If the grant is intended for the acquisition of capital goods, it is considered capital. All other grants are current. Grants differ from loans in that grants do not have a contractual obligation to repay the amounts received.

6) in extraordinary circumstances, when it is difficult to receive tax payments, government loans, the state applies to emission of paper money. This is the most unpopular method, since it causes an increase in the money supply without adequate supply of goods and leads to an intensification of the inflationary process, which has severe socio-economic consequences.

Depending on from the state structure of the country distinguish between:

a) in a unitary state - revenues of the central (state) budget and revenues of local budgets;

b) in a federal state - federal budget revenues, revenues of the budgets of members of the federation and revenues of local budgets;

Government spending budget represent the costs incurred in connection with the fulfillment by the state of its tasks and functions.

Since the beginning of the 20th century, the main trend in the field of state budget expenditures has been their constant increase. An abrupt increase in expenditures occurs during periods of wars, when they increase tenfold. However, in the second half of the XX century. the share of military expenditures decreased and social expenditures and costs of intervention in the economy increased.

State budget expenditures in countries with developed market economies are subdivided into the following five groups:

1 social goals;

2 intervention in the economy;

3 military;

5 the provision of subsidies and loans to developing countries.

The main expenditures in the state budget are military, economic and social interventions.

I. Social spending includes spending on education, health care, social security and social security. They go through numerous social programs. There are about 100 such programs in the US, and several dozen in the UK. Social insurance costs are largely funded by the workers themselves.

2. A rapidly growing group of government expenditures are economic intervention costs(budget funding) . For example, the costs of research and development (R&D from 50 to 70% of all research costs), economic and social infrastructure, support for agriculture, state sectors of the economy, employment in certain sectors of the economy and regions of the country, for export promotion.

Subsidies to private firms have increased, especially in so-called development areas. These include areas with high unemployment and slower economic growth.

In some countries, employment subsidies are given to entrepreneurs for newly hired workers. Significant resources from the state budget are allocated to agriculture. In the countries of the European Union (EU), agriculture is supported not only at the national but also at the interstate level.

Export firms are also actively assisted, which greatly eases their position in the face of intense competition in world markets. stimulates relatively high rates of economic growth, but also softens its cyclical fluctuations. The share of state budget expenditures on intervention in the economy increased from 15-17% in the mid-50s to 20% in the mid-60s and 22-25% in the 80-90s.

3. On military spending in leading foreign countries account for up to 20 of the total state budget expenditures. They are subdivided into direct and indirect military expenditures. Direct military spending reflected in military budgets - a limited part of the state budget. They include the costs of the production of the latest offensive strategic weapons, the maintenance and training of personnel of the armed forces, scientific research of a military nature, the maintenance of militaristic blocs (NATO).

Direct military expenditures rise sharply during periods of war and in conditions of militarization of the economy.

TO indirect military spending includes part of the interest paid on the state debt, indemnities and reparations, pensions and benefits to disabled war veterans and the families of those killed. as well as military expenditures, which are included in the articles of civilian departments. and

4. Expenses for the maintenance of the state administrative apparatus include the costs of maintaining legislative and executive bodies, courts, prosecutors, police, various ministries and departments. In general, expenditures on the state apparatus account for 4-5% of the total budget expenditures.

5. Expenses for foreign economic activity.

6. Expenses for servicing public debt

Budget expenditures, being an important component of government spending as a whole, express the economic relations arising in connection with the use of funds from the national monetary fund.

There are 3 options for the state of the budgetary fund:

· balanced the state when incomes are equal to expenses;

· surplus when income exceeds expenses;

· deficit, when expenses exceed income.

The most common is a deficit.

12.3. TAXES: ESSENCE, FUNCTIONS, TYPES. LAFFER'S CURVE.

Taxes play a decisive role in budget revenues.

Taxes - compulsory payment levied by the state from individuals and legal entities, which are of a fiscal nature.

The state cannot exist without taxes, since they are the main method of mobilizing income in a market economy. He substantiated their necessity and was the first to formulate the basic principles (rules) of taxation A. Smith.

Figure 12.1- Principles of taxation

uniformity or the principle of fairness - the subjects of the state should, as far as possible, according to their ability and strength, that is, according to their income, participate in the maintenance of the government;

certainty - the tax that each individual is obligated to pay must be precisely defined and not arbitrary. Due date, method of payment, amount of payment - all this must be clear and definite for the payer;

convenience- each tax must be levied at the time or in the way when and how it should be more convenient for the payer to pay it;

saving- each tax must be so conceived and developed so that it withholds from the income of the people as little as possible in excess of what it brings to the state treasury.

· tax should be charged on income, not capital... It is extremely important that taxation does not harm national capital. Taxation of any country should not exceed the highest tax rates currently existing in developed countries. As a result, the danger of deprivation of the country by taxing part of its capital will be excluded.

Functions of taxes reveal their socio-economic essence, internal content. In modern conditions, taxes perform three functions: fiscal, regulatory and incentive.

1. Fiscal function - basic, characteristic initially for all states. With its help, state monetary funds are formed, that is, material conditions for the functioning of the state. It is this function that provides a real opportunity to redistribute part of the value of the national income in favor of the poorest social strata of society.

The importance of the fiscal function increases with the economic level of development of society. XX century. characterized by a huge increase in state revenue from tax collection, which is associated with the expansion of its functions and a certain policy of social groups in power.

The fiscal function of taxes creates objective prerequisites for state intervention in economic relations, that is, it determines the regulatory function.

2. Regulatory function means that taxes, as an active participant in redistributive processes, have a significant impact on reproduction, stimulating or restraining its rates, strengthening or weakening the accumulation of capital.

3. Stimulating. Taxes affect the level and structure of aggregate demand, and through the mechanism of market demand, they can promote production or slow it down. The relationship between production costs and the price of goods and services depends on taxes, which is decisive for entrepreneurs in the process of using or selling production capacities

In a modern state, there are various types of taxes (Figure 12.2.)

Direct- personal income tax, corporate income tax, property tax and a number of others.

Indirect - these are taxes levied on the prices of goods and services (VAT), excise taxes, customs duties, fiscal monopoly taxes. Direct taxes prevail in Canada, USA, Japan, Denmark, and indirect taxes - in France, Italy, Norway. In general, countries have shifted towards direct taxation. Indirect taxes prevail in tax revenues to the state budget of the Republic of Belarus. This indicates that the country's tax system performs more fiscal rather than stimulating function.

Figure 12.2- Types of taxes

Classification is especially important depending on the object of taxation and its purpose:

1 personal income tax. The largest revenue among direct taxes is provided by personal income tax - from 25 to 45% or more of the total amount of state budget revenues.

2 corporate income tax. One of the most striking trends in direct taxation in Western countries is the constant decline in the share of corporate tax revenues. For example, in the United States on the eve of World War II, the proceeds from this tax accounted for almost half of all tax revenues in the federal budget, in 1998 - 12%.

The same processes are taking place in all other economically developed countries. The share of this tax in total budget revenues fluctuates from 5.5% in France and Germany, up to 10-11% in the UK.

3 value added tax (VAT). Among the indirect taxes in foreign developed countries, value added tax (VAT) is of the greatest importance. VAT is the most important component of the tax systems of 42 countries, including 17 European ones (valid in all EU countries). From the leading foreign countries, VAT is not applied in the USA and Japan. This tax accounts for 30 to 50% or more of all indirect taxes. In order to stimulate exports, all exported goods are exempt from VAT.

4 excise taxes(for tobacco, spirits, beer, wine, gasoline).

5 customs duties are taxes levied on the import and export of goods. In connection with the internationalization of economic life, the development of the international division of labor, the role of customs duties as a source of income after World War II in economically developed Western countries has been steadily declining. This is due to the general reduction in customs tariffs on industrial goods under the General Agreement on Tariffs and Trade (GATT) ", the creation of duty-free zones in the EU, EFTA, and others.

Tax payments are the most important instrument of state macroeconomic regulation. Taxes should provide the revenue side of the budget with financial resources and, at the same time, they should not be too high in order to maintain incentives for the development of production from national producers. An increase in the tax rate above its optimal value will lead to a reduction in the volume of national production and a decrease in the amount of tax revenues to the state budget. This was shown by A. Laffer, adviser to President Ronald Reagan.

Figure 12.3 - Laffer curve

Using the tax function: T = t Y, A. Laffer showed that there is an optimal tax rate (t opt.) At which tax revenues are maximum (T max.). If the tax rate is increased, the level of business activity (total output) will decrease and tax revenue will decrease as the taxable base (Y) decreases (Figure 12.3). Therefore, in order to combat stagflation (a simultaneous decline in production and inflation), A. Laffer in the early 1980s proposed such a measure as a reduction in the tax rate (both on income tax and on corporate profits).

12.4. STATE DEBT.

As we have already noted, of the three possible states of the budget fund, the state of deficit is the most typical for a modern state. The deficit of the state budget can be covered by borrowing from the state. Government borrowing leads to the emergence of such a phenomenon as government debt.

Public debt is the result of financial borrowing by the state to cover the budget deficit. Public debt is equal to the sum of the deficits of previous years, taking into account the deduction of budget surpluses.

The implementation of government loans from residents gives rise to internal debt and from non-residents - external debt. The sum of external and internal debt is national debt of the country.

Types of public debt:

- Capital government debt presents the entire amount of issued and unpaid government debt obligations, including accrued interest to be paid on these obligations;

- current government debt make up the expenses for the payment of income to creditors for all debt obligations of the state and for the repayment of obligations, the due date of which has come;

Public debt is also subdivided into short-term (up to one year), medium-term (from one year to five years) and long-term (over five years). The most severe are short-term debts. They soon have to pay principal with high interest.

The indicator of the size of public debt is reflected in the SNA and the state controls this important macroeconomic indicator. The IMF has calculated and established the critical values of the size of the public debt. The country's external debt should not exceed:

60% to GDP ;

The ratio of external debt to the export of goods and services (critical) – 220 %;

· The ratio of payments on external debt to the export of goods and services - 25%.

Each state manages public debt so that its value does not exceed a critical value.

Public debt management - it is a system of measures aimed at servicing the debt (paying% on it) and repaying it.

Financing of the costs associated with servicing and repayment of public debt is carried out at the expense of:

1 tax increases (the main, but not the only source);

2 sale of state property;

3 profit if the funds are used productively;

4 implementation of new loans.

Placement of new government loans to pay off debt on already issued is called refinancing of public debt.,

The presence of public debt has the following real negative consequences:

· The repayment of domestic debt by paying interest to the population increases the inequality in the incomes of different social groups, since a significant part of government liabilities is concentrated in the wealthiest part of the population. Consequently, those who hold government securities will become even richer when they are redeemed;

· Raising taxes to pay interest on public debt may undermine the effect of economic incentives for the development of national production;

· Government loans in the national banking system to pay interest on public debt lead to a reduction in investment within the country;

· The presence of public debt creates psychological stress in the country, giving rise to uncertainty in the business activity of its economy.

12.5. FISCAL POLICY: ESSENCE AND TYPES.

In order to accelerate economic growth, control employment and inflation, the state implements fiscal, or fiscal policy.

Fiscal policy is a system of measures taken by the government to stabilize the economy by changing the amount of revenues and / or expenditures of the state budget. (Therefore, fiscal policy is also called fiscal policy.)

Objectives fiscal policy, like any stabilization (countercyclical) policy aimed at smoothing cyclical fluctuations in the economy, are to ensure:

1) stable economic growth;

2) full employment of resources (first of all, solving the problem of cyclical unemployment);

3) a stable price level (solution to the inflation problem).

Fiscal policy is the policy of the government regulating, first of all, aggregate demand. In this case, the regulation of the economy occurs by influencing the value of total expenditures. However, some fiscal policy instruments can be used to influence the aggregate supply through the influence on the level of business activity.

Fiscal policy is pursued by the government.

Instruments fiscal policy are the expenditures and revenues of the state budget, namely: 1) public procurement; 2) taxes; 3) transfers.

The methods of implementation distinguish between fiscal policy: 1) discretionary and 2) automatic (non-discretionary).

Discretionary Fiscal Policy represents a legislative (official) change by the government in the amount of government purchases, taxes and transfers in order to stabilize the economy.

Automatic fiscal policy associated with the action of built-in (automatic) stabilizers.

Automatic stabilizers are instruments whose value does not change, but the very presence of which (their embeddedness in the economic system) automatically stabilizes the economy, stimulating business activity during a downturn and holding it back when overheating. That is, there is a natural adaptation of the economy to the phases of the economic cycle

Automatic stabilizers include: 1) income tax; 2) unemployment benefit.

Income tax works as follows: in a downturn, the level of business activity (Y) decreases, and therefore the amount of tax revenue decreases. In conditions of economic growth, employment grows, output volumes increase, profits grow, tax revenues under a progressive taxation system increase even with a constant tax rate. Tax increases reduce total spending and have an anti-inflationary impact on the economy. Since economic growth is accompanied by an increase in employment, transfer government payments (unemployment benefits, poverty benefits) decrease, which also restrains the development of inflation. On the contrary, in an economic downturn, tax revenues automatically fall and transfer payments rise (unemployment benefits), which contributes to an increase in total spending and a decrease in unemployment.

Such instruments of fiscal policy as taxes and transfers act not only on aggregate demand, but also on aggregate supply.

Since firms view taxes as a cost, tax increases lead to a reduction in aggregate supply, and tax cuts lead to increased business activity and output. A detailed study of the impact of taxes on aggregate supply belongs to the American economist, one of the founders of the concept of "economic supply theory" Arthur Laffer (Figure 12.3).

In developed countries, the economy is regulated by 2/3 through discretionary fiscal policy and by 1/3 through the action of built-in stabilizers.

Fiscal policy instruments are used in different ways depending on the phase of the cycle in which the economy is located. There are two types of discretionary fiscal policy: 1) stimulating and 2) restraining.

Incentive Fiscal Policy(fiscal expansion) it is applied in a downturn (Figure 12.4 (fiscal expansion)) and involves an increase in government spending, tax cuts, or a combination of these measures. It narrows the recessionary output gap and lowers the unemployment rate, aims to increase aggregate demand (aggregate spending). Its instruments are: a) an increase in government procurement; b) tax cuts; c) an increase in transfers.

Restraining fiscal policy(fiscal restriction) is aimed at limiting the cyclical recovery of the economy and involves reducing government spending and increasing taxes. (Figure 12.4). It aims to reduce the inflationary gap in output and reduce inflation and is aimed at reducing aggregate demand (aggregate spending). Its instruments are: a) reduction of public procurement; b) an increase in taxes; c) reduction of transfers.

Figure 12.4- Stimulating and restrictive fiscal policy

Fiscal policy in the Republic of Belarus is constraining, which is associated with inflationary processes in the national economy. The modern fiscal policy of the Republic of Belarus presupposes a reduction in state budget expenditures and an increase in its revenues mainly due to non-tax instruments (the use of privatization mechanisms, stimulation of business activity).

In addition, the tax policy is being improved. This is due to the fact that the fiscal policy of the state was still of a fiscal protective nature, in which the state sought to ensure a high degree of protection of the population. This implied a high tax burden on the economy. In this regard, there was a decrease in the rate of development of production, a decrease in the collection of tax payments, and a deterioration in the collection of taxes. Further reform of the tax system in the republic presupposes further simplification of the taxation system and reduction of the tax burden of the main economic entities.

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1 fiscal policy. Fiscal policy. Types, goals and main instruments of fiscal policy

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3.1 Advantages and Disadvantages of Fiscal Policy

The advantages of fiscal policy include:

1. Multiplier effect. All fiscal policy instruments, as we have seen, have a multiplier effect on the value of equilibrium aggregate output.

3. The presence of automatic stabilizers. Since these stabilizers are built-in, the government does not need to take special measures to stabilize the economy. Stabilization (smoothing of cyclical fluctuations in the economy) occurs automatically.

Disadvantages of fiscal policy:

3. Uncertainty. This disadvantage is typical not only for fiscal, but also for monetary policy. Uncertainty concerns:

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Notes (edit)

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