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Evolution of Approaches to Financing Government Spending: Tax and Debt Policy

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  • Sokolov, Ilya

    (Gaidar Institute for Economic Policy; Russian Presidential Academy of National Economy and Public Administration)

Abstract

The research of evolution and proportion of tax and debt financing of government expenditures allowed to systemize factors and conditions impacting on the government option: whether to finance expenditures with a government debt or taxes. Following research step was devoted to the detailed consideration of the government debt influence on macroeconomic indicators mainly on the GDP. Examination of the world experience concerning the possible government debt level revealed the absence of the recognized common free of risk level due to the unique country’s macroeconomic performance and credit history. Moreover it was examined the world trends of financing government expenditures which reflected both the direct relationship between fiscal sustainability and economic growth and current excessive amount of the government debt. At last hypothesis empirical test was carried out to identify the tax pressure and government debt influence on fiscal sustainability.

Suggested Citation

  • Sokolov, Ilya, 2014. "Evolution of Approaches to Financing Government Spending: Tax and Debt Policy," Published Papers r90223, Russian Presidential Academy of National Economy and Public Administration.
    • Handle: RePEc:rnp:ppaper:r90223
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    References listed on IDEAS

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    1. Afonso, António & Hauptmeier, Sebastian, 2009. "Fiscal behaviour in the European Union: rules, fiscal decentralization and government indebtedness," Working Paper Series 1054, European Central Bank.
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    Keywords

    tax; debt; government; GDP;
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