A Note on Government Budgets

Ben L. Kyer
Gary E. Maggs, St. John Fisher College

Copyright © 2005, The American Economist


The standard pedagogical examination of government budgets includes the distinction between cyclical and structural deficits and surpluses and changes thereof. This paper extends the regular classroom analysis and graphically demonstrates that cyclical changes in the government budget can be decomposed and stated as the summation of the expenditure effect and the revenue effect.