Fiscal Policy: Concept
Arthur Smithies defines fiscal policy as, "a policy under which the government uses its expenditure and revenue programs to produce desirable effects and avoid undesirable effects on the national income, production and employment."
According to Due and Friedlander, “By fiscal policy we refer to the governmental determination of the level and structure of taxes and expenditures, and the manner of finanacing a budgetary surplus or deficit to achieve the various macro-economic goals of full employment, price stability, growth, balance of payments equilibrium, and so forth.”
Ursula Hicks defines, “Fiscal policy is concerned with the manner in which all the different elements of public finance may collectively geared up to forward the aims of the economic policy.”
J.M.Keynes defines, “Fiscal policy is a policy that uses public finance as a balancing factor in the development of the economy.”
Evolution of Fiscal Policy
- reduction of public expenditure to the minimum possible limit;
- tax structure be designed in such a way so that the market or price mechanism be disturbed to a little extent as far as possible; and
- budget to be annually balanced.