The Structural Deficit: What is It, Why Do We ... - The Concord …

One possible response to the recent spike in federal budget deficits — from $161 billion in 2007 to more than $1 trillion in each of the last three years is: Don’t worry. It’s all caused by the bad economy. When the economy recovers, we’ll be fine. See more

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The Structural Deficit: What Is It, Why Do We ... - The Concord …

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Efforts To Reduce Structural Deficits Must Mean More Than …

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Jun 7, 2010 · Originally estimated to have a gross cost of $192 billion and a net deficit increase of $134 billion, the final bill carried a gross cost of $114 billion and a net deficit increase of $54 …

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FAQs about The Structural Deficit: What is It, Why Do We ... - The Concord … Coupon?

Is a structural deficit a problem?

Not necessarily. A structural deficit problem implies that even allowing for cyclical fluctuations in the economy, current government spending is being financed by borrowing. A structural deficit problem implies that borrowing is becoming increasingly unsustainable or expensive. ...

Why is the government's structural deficit more worrying than the cyclical deficit?

The government’s structural deficit is more worrying than the cyclical deficit because it affects long-term fiscal sustainability. Unlike cyclical deficits, structural deficits will persist over time. The cyclical deficit rises and falls following the economic cycle. ...

What causes structural deficits in Australia?

Structural deficits are related to underlying (or longer-term) economic and demographic conditions. In Australia, the federal government’s expenditure has exceeded revenue in every fiscal year since 2008, and in 21 of the last 35 fiscal years. ...

What happens if the structural deficit increases?

If the structural deficit increases, it indicates the government is deliberately pursuing an expansionary fiscal policy to stimulate economic growth. On the other hand, if the structural deficit declines, the government may try to curb inflation or adopt contractionary fiscal policies. ...

Does a structural deficit persist if the economy expands?

So, it may persist even as the economy expands and operates at full employment. Economists look to changes in the structural deficit to indicate the government’s fiscal stance. If the structural deficit increases, it indicates the government is deliberately pursuing an expansionary fiscal policy to stimulate economic growth. ...

How can we address the structural deficit?

They also regulate individual and private sector business activity. One way to address the structural deficit is to permanently reduce government expenditure as a percentage of gross domestic product (GDP). Government expenditure as a proportion of GDP is currently higher than the long-term average. ...