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Théories et pratiques du déficit public

Abstract : Since 1974 almost all western economies have had large public sector deficits, France's being one of the smaller. Are these deficits due to an uncontrolled growth in public spending ? Are they the automatic result of the decline in the level of economic activity ? Or are they just the side-effect of macroéconomic stabilization policy? The first part of the article shows that a public deficit can be helpful when growth slows down, or unemployment rises, or when there is an external constraint. The deficit can both sustain aggregate demand when corporate sector demand has fallen, and on the supply side (unlike increased charges on the corporate sector) it can help competitiveness and investment and, therefore, raise the level of production compatible with a given external deficit. The second part discusses the financing of the deficit. The difference between the impact of bond and money-finance depends on the monetary policy regime in use and on the impact of the sales of bonds on the demand for money. It is shown that an attempt to achieve money supply targets may lead to destabilization of the economy but the government has enough policy instruments to make its monetary and fiscal policies independent of the way in which the budget is financed. If the rate of interest is chosen to achieve a particular exchange rate and the personal sector wish to save and to hold these savings in the form of money balances, it may be advisable for the government to allow the money supply to increase if it wishes to limit corporate indebtedness to the banking system.
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Submitted on : Tuesday, November 30, 2021 - 7:37:09 PM
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Henri Sterdyniak. Théories et pratiques du déficit public. Revue de l'OFCE, Presses de Sciences Po, 1983, pp.65 - 90. ⟨10.3406/ofce.1983.934⟩. ⟨hal-03458085⟩

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