The economic and social role of the state and the budget

While there appears to be a consensus that the ambitions of government in the economic and social arena were excessive earlier, one must not lose sight of the fact that Governments provide important services and carry out politically mandated economic and social functions, and that only government will undertake many of these activities. Moreover, while government borrowing has been excessive in many cases, it does not follow that Governments should never borrow. Indeed, there is no reason that government outlays that benefit a generation of citizens — as for a bridge or sewer system — should be fully paid for by current taxpayers rather than by the beneficiaries over time through the servicing of bonds. It is important, in other words, to know where the boundary lies between an appropriate deficit and an excessive one. Partly, tms entails a measurelnent problem: a variety of approaches and recommendations exist on what should be included in the government accounts, how the deficit should be defined and how small it should be. The present chapter thus seeks to sort through recent thinking about the proper scope of the economic and social activities of government and about budgetary goals for government.

Sustainable Development Goals:

Decent Work and Economic Growth

Industry, Innovation and Infrastructure

Climate Action