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Government Budgeting

Government Budgeting. 4 . 1. The Budget Deficit in Recent Years. Government Budgeting. 4 . 1. Budget Policies and Deficits at the State Level. balanced budget requirement (BBR) A law forcing a given government to balance its budget each year (spending = revenue).

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Government Budgeting

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  1. Government Budgeting 4 . 1 The Budget Deficit in Recent Years

  2. Government Budgeting 4 . 1 Budget Policies and Deficits at the State Level balanced budget requirement (BBR) A law forcing a given government to balance its budget each year (spending = revenue).

  3. Measuring the Budgetary Position of the Government: Alternative Approaches 4 . 2 The Standardized Deficit

  4. Measuring the Budgetary Position of the Government: Alternative Approaches 4 . 2 Cash vs. Capital Accounting cash accounting A method of measuring the government’s fiscal position as the difference between current spending and current revenues. capital accounting A method of measuring the government’s fiscal position that accounts for changes in the value of the government’s net asset holdings.

  5. Do Current Debts and Deficits Mean Anything? A Long-Run Perspective 4 . 3 implicit obligation Financial obligations the government has to the future that are not recognized in the annual budgetary process. Background: Present Discounted Value present discounted value (PDV) The value of each period’s dollar amount in today’s terms. Mathematically, if the interest rate is r, and the payment in each future period are F1, F2, . . . and so on, then the PDV is computed as:

  6. Do Current Debts and Deficits Mean Anything? A Long-Run Perspective 4 . 3 Alternative Measures of Long-Run Government Budgets Generational Accounting The budget measure answers the question by first estimating the government’s intertemporal budget constraint:

  7. Do Current Debts and Deficits Mean Anything? A Long-Run Perspective 4 . 3 Alternative Measures of Long-Run Government Budgets Generational Accounting

  8. Do Current Debts and Deficits Mean Anything? A Long-Run Perspective 4 . 3 Alternative Measures of Long-Run Government Budgets Generational Accounting

  9. Why Do We Care About the Government’s Fiscal Position? 4 . 4 Intergenerational Equity intergenerational equity The treatment of future generations relative to current generations.

  10. Do Current Debts and Deficits Mean Anything? A Long-Run Perspective 4 . 3 Alternative Measures of Long-Run Government Budgets Long-run Fiscal Imbalance

  11. Do Current Debts and Deficits Mean Anything? A Long-Run Perspective 4 . 3 What Does the U.S. Government Do?

  12. Why Do We Care About the Government’s Fiscal Position? 4 . 4 Background: Savings and Economic Growth More Savings, More Capital

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