Debt Management and the Fiscal Balance
Review of Political Economy, 2020, vol. 32, issue 4, 596-603
This paper presents a method for integrating debt management into fiscal policy using principles derived from the work of Kalecki. It proposes dividing the government budget into a functional budget containing taxes and expenditure that may affect expenditures in the non-financial economy, and a financial budget containing taxes on wealth and higher incomes that do not affect expenditures in the real economy but do affect the liquidity of wealth portfolios. This gives the government two more or less independent instruments to manage economic growth and government debt. The respective balances between the functional and financial budgets then affect the fiscal multiplier showing how cases of expansionary fiscal contraction, contractionary fiscal expansion, expansionary financial instability, and deflationary financial instability may arise. The analysis applies to domestically financed debt.
References: Add references at CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Access to full text is restricted to subscribers.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:taf:revpoe:v:32:y:2020:i:4:p:596-603
Ordering information: This journal article can be ordered from
Access Statistics for this article
Review of Political Economy is currently edited by Steve Pressman and Louis-Philippe Rochon
More articles in Review of Political Economy from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().