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The Economic Policies of European Governments, Part II: Fiscal Policy

Published online by Cambridge University Press:  27 January 2009

Andrew T. Cowart
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Extract

While political controversies over the legitimacy of monetary interventions in Western economies were settled decades ago, the widespread acceptance of fiscal interventions as appropriate tools for achieving economic stability and economic growth is much more recent and much less pervasive. Even the pre-Depression classical economic model specified a role for government monetary policy: ensuring an appropriate stock of money. While institutions of monetary policy making now enjoy both a long history of utilizing monetary policy instruments and a low level of ideological conflict over the legitimacy of those interventions, the institutions of fiscal policy making enjoy neither. Though some governments had begun to practise fiscal interventions before the Second World War, the widespread use of such instruments is, by and large, a post-war phenomenon. Thus, governments have generally had less experience in learning ‘how to do it’.

Type
Articles
Information
British Journal of Political Science , Volume 8 , Issue 4 , October 1978 , pp. 425 - 439
Copyright
Copyright © Cambridge University Press 1978

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References

1 For a more complete discussion of uncontrollable spending, see Wanat, John, Introduction to Budgeting (North Scituate, Mass.: Duxbury Press, 1978).Google Scholar

2 A country-by-country treatment of provisions for the timing of tax collections is provided by Hansen, Bent in his Fiscal Policy in Seven Countries: 1955–1965 (Paris: Organization for European Co-operation and Development, 1969).Google Scholar

3 Heclo, Hugh and Wildavsky, Aaron, The Private Government of Public Money: Community and Policy Inside British Politics (London: Macmillan Company, 1973)Google Scholar; Lord, Guy, The French Budgetary Process (Berkeley: University of California Press, 1973).Google Scholar

4 Inter-Parliamentary Union, Parliaments (London: Cassell, 1966).Google Scholar

5 In separate chapters on each country, Hansen, , Fiscal Policy in Seven CountriesGoogle Scholar, provides a more complete discussion of these provisions.

6 It is, of course, appropriate to question the validity of using quarterly data in the study of fiscal policy making when, in fact, budgets are approved on an annual, not a quarterly, basis. As I have suggested above, however, governments do have available to them a number of options which allow them to vary the magnitude of expenditures (and sometimes taxes) rather significantly during the budget year (e.g. supplemental appropriations, delays in expenditures, acceleration of expenditures, separate provisions for capital expenditures). Furthermore, changes in tax rates (usually with parliamentary approval) may be secured at any point during the budget year. Finally, if it were true that significant fiscal policy decisions could be made only once on an annual basis, the question of its utility for economic fine tuning would be largely moot. Thus, it seems appropriate to use quarterly settings as the basis for evaluation of that instrument.