IDEAS home Printed from https://ideas.repec.org/p/wpa/wuwpma/9809003.html
   My bibliography  Save this paper

Can Expenditure Cuts Eliminate a Budget Deficit? The Australian Experience

Author

Listed:
  • George Argyrous

    (The Jerome Levy Economics Institute)

Abstract

Australia Governments since the late 1970's have attempted to eliminate the fiscal deficit through reductions in expenditure. These efforts have failed. With each successive business cycle the Federal Government's budget outcome has been an ever growing deficit. This paper explains the failure of the government to achieve its balanced budget objective through expenditure reductions. It argues that the impact of these expenditure reductions on the course of the business cycle and the long term development of the economy has actually fed back onto the budget outcome in a negative way. These feedbacks have rendered the instruments for achieving its policy objective self-defeating. The paper explores the compositional changes in government outlays, away from capital to current outlays, that have resulted from this policy objective and which may have a detrimental effect on long run growth.

Suggested Citation

  • George Argyrous, 1998. "Can Expenditure Cuts Eliminate a Budget Deficit? The Australian Experience," Macroeconomics 9809003, University Library of Munich, Germany, revised 24 Feb 1999.
    • Handle: RePEc:wpa:wuwpma:9809003
    Note: Type of Document - Acrobat PDF; prepared on IBM PC; to print on PostScript; pages: 21; figures: included
    as

    Download full text from publisher

    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/mac/papers/9809/9809003.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 177-200, March.
    2. Alicia H. Munnell, 1990. "Why has productivity growth declined? Productivity and public investment," New England Economic Review, Federal Reserve Bank of Boston, issue Jan, pages 3-22.
    3. John F. Henry & L. Randall Wray, 1998. "Economic Time," Macroeconomics 9811004, University Library of Munich, Germany.
    4. Sharon J. Erenburg, 1993. "The Relationship Between Public and Private Investment," Economics Working Paper Archive wp_85, Levy Economics Institute.
    5. L. Randall Wray, 1989. "A Keynesian Presentation of the Relations among Government Deficits, Investment, Saving, and Growth," Journal of Economic Issues, Taylor & Francis Journals, vol. 23(4), pages 977-1002, December.
    6. Harvie, C. & Kearney, C., 1996. "Public Infrastructure Canpital and Private Investment," Economics Working Papers wp96-2, School of Economics, University of Wollongong, NSW, Australia.
    7. Seccareccia, M. & Sharpe, A., 1991. "Canada's Competitiveness: Beyond the Budget Deficit," Working Papers 9111e, University of Ottawa, Department of Economics.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marie-Ange VEGANZONES-VAROUDAKIS, 2000. "Infrastructures, investissement et croissance : un bilan de dix années de recherches," Working Papers 200007, CERDI.
    2. Raffaello Bronzini & Paolo Piselli, 2006. "Determinants of long-run regional productivity: the role of R&D, human capital and public infrastructure," Temi di discussione (Economic working papers) 597, Bank of Italy, Economic Research and International Relations Area.
    3. Zhenhua Chen & Kingsley Haynes, 2015. "Multilevel assessment of public transportation infrastructure: a spatial econometric computable general equilibrium approach," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 54(3), pages 663-685, May.
    4. Urrunaga, Roberto & Aparicio, Carlos, 2012. "Infrastructure and economic growth in Peru," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    5. Garikai Makuyana & Nicholas M. Odhiambo, 2019. "Public and private investment and economic growth in Malawi: an ARDL-bounds testing approach," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 32(1), pages 673-689, January.
    6. Leone Leonida & Leone Leonida & Daniel Montolio, 2003. "Public Capital, Growth and Convergence in Spain. A Counterfactual Density Estimation Approach," Working Papers 2003/3, Institut d'Economia de Barcelona (IEB).
    7. Torstein Bye & Alexandra Katz, 1995. "Returns to Publicly Owned Transport Infrastructure Investment . A Cost Function/Cost Share Approach for Norway, 1971-1991," Discussion Papers 154, Statistics Norway, Research Department.
    8. Mathilde Le Moigne & Francesco Saraceno & Sébastien Villemot, 2016. "Probably Too Little, Certainly Too Late. An Assessment of the Juncker Investment Plan," PSE Working Papers hal-03459360, HAL.
    9. Sangho Kim & Jaewoon Koo & Young Hoon Lee, 1999. "Infrastructure And Production Efficiency: An Analysis On The Korean Manufacturing Industry," Contemporary Economic Policy, Western Economic Association International, vol. 17(3), pages 390-400, July.
    10. Joanna Mackiewicz-Łyziak, 2010. "Wpływ infrastruktury na produktywność w gospodarce Polski," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 3, pages 41-61.
    11. David Alan Aschauer, 2000. "Do states optimize? Public capital and economic growth," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 34(3), pages 343-363.
    12. Roberto Leon-Gonzalez & Daniel Montolio, 2004. "Growth, convergence and public investment. A Bayesian model averaging approach," Applied Economics, Taylor & Francis Journals, vol. 36(17), pages 1925-1936.
    13. Mitra, Arup & Sharma, Chandan & Véganzonès-Varoudakis, Marie-Ange, 2014. "Trade liberalization, technology transfer, and firms’ productive performance: The case of Indian manufacturing," Journal of Asian Economics, Elsevier, vol. 33(C), pages 1-15.
    14. Maxime Menuet & Alexandru Minea & Patrick Villieu, 2018. "Deficit, monetization, and economic growth: a case for multiplicity and indeterminacy," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(4), pages 819-853, June.
    15. Nikos Benos & Nikolaos Mylonidis & Stefania Zotou, 2017. "Estimating production functions for the US states: the role of public and human capital," Empirical Economics, Springer, vol. 52(2), pages 691-721, March.
    16. repec:hal:spmain:info:hdl:2441/2a4lft86ed8kqpphgfkgrdfrk1 is not listed on IDEAS
    17. Silvia Bertarelli, 2006. "Public capital and growth," Politica economica, Società editrice il Mulino, issue 3, pages 361-398.
    18. Ma, Liang & Ye, Runing, 2019. "Does daily commuting behavior matter to employee productivity?," Journal of Transport Geography, Elsevier, vol. 76(C), pages 130-141.
    19. Kawaguchi, Daiji & Ohtake, Fumio & Tamada, Keiko, 2009. "The productivity of public capital: Evidence from Japan's 1994 electoral reform," Journal of the Japanese and International Economies, Elsevier, vol. 23(3), pages 332-343, September.
    20. Fedderke, J.W. & Bogetic, Z., 2009. "Infrastructure and Growth in South Africa: Direct and Indirect Productivity Impacts of 19 Infrastructure Measures," World Development, Elsevier, vol. 37(9), pages 1522-1539, September.
    21. Michael Iacono & David Levinson, 2012. "Rural Highway Expansion and Economic Development: Impacts on Private Earnings and Employment," Working Papers 000101, University of Minnesota: Nexus Research Group.

    More about this item

    JEL classification:

    • E - Macroeconomics and Monetary Economics

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpma:9809003. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: EconWPA (email available below). General contact details of provider: https://econwpa.ub.uni-muenchen.de .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.