Full Employment Budget Surplus

Abstract

The full or high employment budget surplus is a device for measuring fiscal stance and, specifically, a means of distinguishing the effects of discretionary budgetary policy on the economy from the autonomous effects on the budget of variations in economic activity. In other words, by estimating what public sector outlays, government revenue and, therefore, the budget balance would be, on the basis of current tax rates and expenditure programmes, the implications of policy action can potentially be isolated and the often misleading nature of changes in the actual budget balance kept in perspective.