经济学第十一章.pptVIP

Is government debt a problem? At times, government debt may be necessary, eg: during a recession. Economists examine the debt level, and the interest repayments on the debt relative to GDP, to determine if it is a problem. Debt servicing (interest repayments) involves an opportunity cost. Government borrowing also leads to crowding out. Deficits, surpluses and federal government debt Supply side effects of fiscal policy Fiscal policies have long-run effects by expanding the productive capacity of the economy and increasing the rate of economic growth. Lowering taxes can increase the incentive to work, and encourage investment ? increase labour participation, capital stock and technological advancement. Tax simplification may improve the efficiency of firm and household. Resources diverted to tax compliance and tax minimisation can be put to more productive uses. Provision of infrastructure human capital investment increases productivity. * * * * Figure 17.1: Government expenditure as a percentage of GDP, 1960 – 2008. Source: Reserve Bank of Australia (2009), Statistics, Gross Domestic Product Expenditure Components, Table G11, viewed 2 June 2009, at .au. Government expenditure as a proportion of GDP fluctuated quite significantly during the 1960s, and then trended upwards until 1990. Government expenditure as a proportion of GDP peaked in 1986 at almost 25%. Throughout the 1990s there was a downward trend – a result of the microeconomic reform policies of governments during this time. By 2008 government expenditure as a proportion of GDP had begun to rise again. * Figure 17.2: Government expenditure as a percentage of GDP, 2007/08 to 2012/13. Source: Australian Government (2009), Budget 2009-10, Budget Overview, Appendix A, Australian Government Budget Aggregates, viewed 2 June 2009, at .au. The Federal Government ‘stimulus package’ during the global financial crisis contained significant projected increases in government spending as a proportion of GDP – th