Macroeconomics › Section Q · Government budgets and fiscal policy › Topic Q.7
The question of a balanced budget
Should the federal government be required to balance its budget every year, as nearly every state must? The question has been argued for decades, and weighing it brings together everything this section has covered: spending, taxes, debt, stabilisers and the limits of policy.
In this topic
- A long-running proposal
- The case for a rule
- The case against: stabilisers switched off
- Worked example: balancing in a recession
- Is government like a household?
- Deficits for investment
- Worked example: does the investment pay?
- Deficits do carry risks
- Middle-ground fiscal rules
- Budget politics in practice
- Common mistakes to avoid
- Key takeaways
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