What is fiscal sustainability?

fiscal sustainability is an important quality for any government expenditure. This term concerns the impact that policy has a long -term government. If politics is sustainable, in the future it does not prevent the ability of the government policy. Different analysts and commentators have different definitions of what makes policy fiscal sustainable because sustainability depends on the admissibility of certain future government events such as raising taxes and involvement in deficit expenses. Sustainability is a critical point of view for creators, because ignorance can lead to economic and political collapse when the government faces a debt that cannot repay. Some people criticize politicians that create any budget deficit for being unsustainable. However, these policies are not unsustainable if they are a short -term horizon to create a debt. For example, the government may overdo in one year and in the following year it forms a deficit with a budget excess. Like some other institutional investors have nEkonečný horizon, which means that they expect to exist in eternity and to handle finances. On the other hand, individual investors have horizons that are generally limited to their own life. Longer horizons give investors greater flexibility with the timing of their investment.

Although it is disproportionate to define every policy that creates a deficit as fiscal, it is equally disproportionate to indicate that any policy is in line with the aim of fiscal sustainability, as the government can always tax people more or reduce expenditure to create a deficit. While it is theoretically true, fiscal sustainability is a concept based on real behavior than the theory. A large increase in taxes and budget cuts are politically impossible. Conservative spectators protest to raise taxes, while recipients of the budget funds of the lobby against cuts on their programs. PolicyIt cannot be sustainable if it creates a deficit too large to be overcome by means of politically acceptable actions.

The basic definition of fiscal sustainability is therefore vague. This depends on the political views of the person who performs the analysis. For example, a commentator with liberal tendencies could be more comfortable with the idea of ​​high taxes than would be conservative, so he could define a wider range of policies as fiscal sustainable.