英语论文网

debt accumulation and public spending.

(Roubini & Sachs, 1988) analyzed budget deficits in industrial nations on political and economic grounds. Paper throws light upon public debt and fiscal deficit management in these nations. (Roubini & Sachs, 1988) believe that political and economic factors must be assessed as a consequence of persistent and growing deficits. Authors propose short tenure of government and presence of numerous political parties to be potential boosters of budget deficit. Equilibrium approach to fiscal policy has been declared as starting point of analysis by authors. According to this approach, tax and deficit policies are consequence of inter-temporal optimization by budgetary authorities who pursue to reduce burden of tax. (Roubini & Sachs,1988) state that differing institutional arrangements as part of political process across OEDC countries explain differing patterns of budget deficits and declare this demonstration as prime goal of their research. (Roubini & Sachs, 1988) determine that transitory increase in government spending lead to huge budget deficits and convict weaker governments for large deficits in history of OEDC nations.

(Pekarski, 2010) inspect link between budget deficits and inflation in economies having high inflation problem. Author suggests on behalf of past studies that despite strong evidence of positive relationship between budget deficit and inflation during high inflation periods, this relationship is still questionable. (Pekarski, 2010) tells focus of paper to investigate fiscal policy and inflation dynamics. (Pekarski, 2010) concludes that extreme inflation in high inflation economies can be illuminated by hysteresis effect. Negative feedback on inflation, the Patinkin effect has been also proposed by author to take place.

(Kiani, 2009) gauges effect of budget deficits on long-term interest rates. The rationale behind this approach consists of two parts. Firstly, in relevance with crowding out hypothesis, long-term rates are more pertinent. Secondly, long-term rates are less likely to be influenced by central bank as interest rate target policies pursued by central bank are based on short-term rates. Results of (Kiani, 2009) show a positive correlation between budget deficits and slope of yield curve. Author suggests to formulate such fiscal policies that are intended to keep deficits lower because of increased financial market sensitivity to budgetary position.

(Keho, 2010) has used an enhanced approach and has examined relationship between economic growth and budget deficits. His study also tests for granger causality with target to develop a budgetary rule with goal to achieve budget surplus. (Keho, 2010) suggests that granger causality presents an obscure picture and thus inferences should not be made on its basis. Findings of this study suggest that deficits adversely impact economic growth so the budgetary rule here is to restrict size of deficits. (Keho, 2010) concluded with this rule and suggested a two-way relationship between economic growth and budget deficits for some economies while for other countries, this relationship is unidirectional.

Unlike researches discussed earlier, (Bemheim, 1988) has specifically focused on budget deficits and trade balance. He also discusses the way budget deficits impact trade deficits. (Bemheim, 1988) used time series analysis of data on 6 countries and