Budgetary Policy, Public Expenditure and the Balance of Payments

Abstract

This chapter considers evidence from the model which is relevant to the conduct of taxation and expenditure policy as practised in the post-war period. Section 15.1 discusses the distinction between budgetary policy and public expenditure planning which has become part of official orthodoxy; it also examines a new approach to fiscal policy that has recently been suggested, involving control over the public sector deficit. Sections 15.2 and 15.3 contain evidence from the model on the relationship between the public sector deficit and the balance of payments. Sections 15.4 and 15.5 contain conclusions on the past operation of budgetary policy and public expenditure planning respectively.