Chapter 11 presents deficits, surpluses, and the public debt. After studying this chapter you will be able to understand: What a budget deficit and a budget surplus are, and their connection to the public debt; about the recent history of Canada’s budget surpluses, deficits and public debt; the misconceptions about budget deficits and the national debt; the substantive issues about budget deficits and the public debt; the effect of the recent budgetary surplus.
Trang 1Chapter 11
Deficits, Surpluses,
& the Public
Public Mastercard
PUBLIC VISA
Public Mastercard
Trang 2In this chapter you will learn
What a budget deficit and a budget surplus are, and their connection to the public debt About the recent history of Canada’s budget surpluses, deficits and public debt
The misconceptions about budget deficits and the national debt
The substantive issues about budget deficits and the public debt
Trang 3Options for the Surpluses
Trang 4Deficit & Debt: Definitions
Trang 5Options for the Surpluses
Trang 7Budget Philosophies
Cyclically Balanced Budget
Annually Balanced Budget
Trang 8Budget Philosophies
Cyclically Balanced Budget
Annually Balanced Budget
Trang 9Options for the Surpluses
Trang 10The Public Debt : Facts & Figures
Government of Canada Public Debt, selected years
0 100 200 300 400 500 600 700
Trang 11The Public Debt : Facts & Figures
Causes
WarsRecessionsLack Of Political Will
Trang 12The Public Debt : Facts & Figures
Trang 13Italy Japan
Canada has a relatively high public
debt, as a percentage of GDP
Canada has a relatively high public
debt, as a percentage of GDP
Trang 14The Public Debt : Facts & Figures
Quantitative Aspects
Debt & GDPInternational ComparisonsInterest Charges
Trang 15Government of Canada Public Debt Interest Charges
0 5 10 15 20 25 30 35 40 45 50
Trang 16The Public Debt : Facts & Figures
Quantitative Aspects
Debt & GDPInternational ComparisonsInterest Charges
Ownership
Trang 17Ownership of Canada's Public Debt in 2000
Figure 11-1
Public &
chartered banks 72%
Foreigners 20%
Bank of Canada 8%
Total debt: $651 billion
Trang 18The Public Debt : Facts & Figures
Quantitative Aspects
Debt & GDPInternational ComparisonsInterest Charges
OwnershipAccounting & Inflation
Trang 19Options for the Surpluses
Trang 20False Concerns
Bankruptcy
Burdening Future Generations
Trang 21Options for the Surpluses
Trang 22Substantive Issues
Income DistributionIncentives
External DebtCrowding Out & the Stock of Capital
Trang 2316 14 12 10 8 6 4 2
0
5 10 15 20 25 30 35 40
The Crowding Out Effect
Figure 11-2
Trang 24The Crowding Out Effect
Qualifications
Public InvestmentPublic-Private Complementarities
Trang 250
5 10 15 20 25 30 35 40
The Crowding Out Effect
The crowding out effect may be partially offset
by increased private investment, due to improvements in infrastructure
Figure 11-2
Trang 27Deficits & Surpluses: 1990-2000
deficits were enormous during the early 1990s
budget surpluses appeared in late 1990s
surpluses expected to grow through the 2000s
Trang 28Federal Budget Deficits & Surpluses
Annual budget deficits throughout most of the 1980s & the first half of the 1990s gave way to surpluses in
Trang 29Options for the Surpluses
Trang 30Options for the Surpluses
Paying Down the Public DebtReduce Taxes
Increase Public ExpendituresCombinations of Policies
Trang 31Options for the Surpluses