What is a fiscal consolidation strategy? (1 Viewer)

[simsimsimsimsim]

Riley's book talks about a fiscal consolidation strategy... does anyone know what that is? whats its aim???

if anybody could help me out that'd be great...

thanks guys...

 

[northbank]

It's a part of fiscal strategy. In the 90s, the Aussie Govt. used to use it in order to pursue external balance because it had the ability to raise national savings which is demonstrated in the relationship I = S + KAS

It's really not that important, just a method of fiscal policy which used to be used.

 

[blaze.bluetane]

Fiscal consolidation is a reduction in government spending [G], or an increase in taxation [T] causing a smaller budget [fiscal] deficit, in terms of magnitude [obviously a decrease in terms of sign + or - means a larger deficit].

Basically it is the process whereby the government decides to adopt a contractionary fiscal stance, moving from a budget deficit to a neutral budget balance.

hope this helps..?

 

[blaze.bluetane]

It's a part of fiscal strategy. In the 90s, the Aussie Govt. used to use it in order to pursue external balance because it had the ability to raise national savings which is demonstrated in the relationship I = S + KAS

It's really not that important, just a method of fiscal policy which used to be used.

more of a process of adjusting fiscal policy [search fiscal adjustment] than a method of fiscal policy but yes I think you are basically right.

Is it still used?? I was under the impression that it is still under use [albeit maybe not in the current economic environment]? Correct me if I am wrong.

 

[simsimsimsimsim]

It's a part of fiscal strategy. In the 90s, the Aussie Govt. used to use it in order to pursue external balance because it had the ability to raise national savings which is demonstrated in the relationship I = S + KAS

It's really not that important, just a method of fiscal policy which used to be used.

What's I = S + KAS?

Thanks heaps for you help guys =]