Deficits
in sentence
2171 examples of Deficits in a sentence
In the meantime, Greece’s regulatory authorities would be keeping a watchful eye over commercial lending practices, while a debt brake would prevent our government from indulging in old, bad habits, ensuring that our state never again slips into primary
deficits.
Rather than focus on budget deficits, we should concentrate on the denominator of debt-to-GDP ratios.
In the OECD, many of the countries with the highest debt-to-GDP ratios – including Italy, Portugal, and Spain – ran relatively modest deficits, but failed to invest effectively in education, research, training, or well-designed welfare programs that facilitate economic adjustment.
The ultimate solution was to finance spending not with the inflation tax, but with debt: first public debt, and then, as governments cut their deficits, private-sector debt.
That made sense when they needed those reserves to be very liquid so that they could bridge temporary trade
deficits.
Large budget
deficits
have led to high inflation in countries that are forced to create money to finance those
deficits
because they cannot sell longer-term government bonds.
The rate of inflation actually fell in the US during the early 1980’s, when the US last experienced large fiscal
deficits.
The idea is to keep expenditure below what the government can raise in taxes in the long run (thereby ensuring sustainability), while allowing
deficits
whenever the economy is operating below potential and tax revenue is abnormally low (thereby guaranteeing flexibility and contributing to macroeconomic stabilization).
At a time when rich countries like the United States are running
deficits
of 12% of GDP because of the global financial meltdown, the IMF has been telling countries like Latvia and Ukraine, which did not start the crisis but have turned to the Fund to help combat it, that they must balance their budgets if they want aid.
Meanwhile, rising fiscal
deficits
in most economies are now pushing up the yields of long-term government bonds.
But some of this increase is driven by more worrisome factors: the effects of large budget
deficits
and debt on sovereign risk, and thus on real interest rates; and concerns that the incentive to monetize these large
deficits
will lead to high inflation after the global economy recovers in 2010-11 and deflationary forces abate.
The Growth and Stability Pact (which mandates a 3% of GDP limit on the size of the budget
deficits
of euro-zone members) is another contentious issue that awaits resolution.
For example, after the 2008 financial crisis, while the US pressed China to let its currency appreciate, officials at China’s central bank began arguing that America needed to increase its savings, reduce its deficits, and move toward supplementing the dollar’s role as a reserve currency with IMF-issued special drawing rights.
The G-20 is focusing on the need to “re-balance” financial flows, altering the old pattern of US
deficits
matching Chinese surpluses.
Countries with persistent structural current-account
deficits
will incur additional external-financing costs, and eventually will reach the limits of leverage.
The assumption that a benign growth and interest-rate environment was a permanent state of affairs led to a massive failure of fiscal counter-cyclicality in the advanced economies, as budget
deficits
became chronic, rather than a response to depressed domestic demand.
His proposals, he argues, are not an additional arrow in the quiver, but replacements for “traditional Keynesian policies…[that] increase budget
deficits
and national debt.”
What is clear is that a key factor has been the persistence of large imbalances within the eurozone – current-account
deficits
on the periphery, mirrored by surpluses in the core – owing mainly to differences in productivity and competitiveness.
In addition, the single currency weakens the market signals that would otherwise warn a country that its fiscal
deficits
were becoming excessive.
And when a country with excessive fiscal
deficits
needs to raise taxes and cut government spending, as Greece clearly does now, the resulting contraction of GDP and employment cannot be reduced by a devaluation that increases exports and reduces imports.
In retrospect, it is clear that some of the countries were allowed to join prematurely, when they still had massive budget
deficits
and high debt-to-GDP ratios.
Moreover, some countries’ industrial composition and low rates of productivity growth mean that a fixed exchange rate would doom them to increasingly large trade
deficits.
For the rest, some mechanism of enhanced surveillance and control may be adopted to limit future fiscal
deficits.
It should thus be obvious that banks should hold some capital against the risks they assume when lending to governments with particularly high debts or large budget
deficits.
During the financial crisis, it had to moderate these views considerably, taking steps that ran counter to its ideology: increasing
deficits
in the trough of the crisis (2009-2010) and raising taxes once growth resumed (2011).
But, on the receiving end of the message in southern Europe (and across the Atlantic), “austerity” is interpreted largely in fiscal terms – as an excessively rapid and potentially growth-destroying drive to cut
deficits
faster than the economy can structurally adjust and fill the gap in aggregate demand.
Lower returns mean lower pensions – or larger
deficits.
The fifth option is to tighten fiscal policy and reduce budget
deficits
with the aim of lowering the high interest rates that drive the inflows.
In several countries, debt-financed housing booms have left households and companies over-leveraged; and governments have reduced
deficits
to contain their own debt.
Making matters worse, unrestrained government spending further buoyed the economy during the Bush years, with fiscal
deficits
reaching new heights, making it difficult for the government to step in now to shore up economic growth as households curtail consumption.
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