deficit financing

(esp. of a government) expenditures in excess of public revenues, made possible typically by borrowing.

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In government, the practice of spending more money than is received as revenue, the difference being made up by borrowing or minting new funds.

The term usually refers to a conscious attempt to stimulate the economy by lowering tax rates or increasing government expenditures. Critics of deficit financing regularly denounce it as an example of shortsighted government policy. Advocates argue that it can be used successfully in response to a recession or depression, proposing that the ideal of an annually balanced budget should give way to that of a budget balanced over the span of a business cycle. See also John Maynard Keynes; national debt.

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      practice in which a government (government budget) spends more money than it receives as revenue, the difference being made up by borrowing or minting new funds. Although budget deficits may occur for numerous reasons, the term usually refers to a conscious attempt to stimulate the economy by lowering tax rates or increasing government expenditures. The influence of government deficits upon a national economy may be very great. It is widely believed that a budget balanced over the span of a business cycle should replace the old ideal of an annually balanced budget. Some economists have abandoned the balanced budget concept entirely, considering it inadequate as a criterion of public policy.

      Deficit financing, however, may also result from government inefficiency, reflecting widespread tax evasion or wasteful spending rather than the operation of a planned countercyclical policy.

      Where capital markets are undeveloped, deficit financing may place the government in debt to foreign creditors. In addition, in many less-developed countries, budget surpluses may be desirable in themselves as a way of encouraging private saving.

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Universalium. 2010.

Look at other dictionaries:

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  • deficit financing — n. the practice of seeking to stimulate a nation s economy by increasing government expenditures beyond revenue sources (deficit spending) …   English World dictionary

  • deficit financing — noun : the financing of government expenditures by borrowing rather than by taxation …   Useful english dictionary

  • deficit financing — The creation of a government budget deficit for the purpose of expanding economic activity by fiscal policy …   Big dictionary of business and management

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  • deficit financing — /ˌdɛfəsət ˈfaɪnænsɪŋ/ (say .defuhsuht fuynansing) noun a practice which enables a government Treasury to make payments when its receipts fail to cover expenditures …   Australian English dictionary

  • deficit financing — / defɪsɪt ˌfaɪnænsɪŋ/ noun planning by a government to cover the shortfall between tax income and expenditure by borrowing money …   Marketing dictionary in english

  • deficit financing — / defɪsɪt ˌfaɪnænsɪŋ/ noun a type of financial planning by a government in which it borrows money to cover the difference between its tax income and its expenditure …   Dictionary of banking and finance

  • deficit financing — Fin the borrowing of money because expenditures will exceed receipts …   The ultimate business dictionary

  • budget deficit financing — A deliberate budgeted excess of government expenditure over income, with the object of stimulating economic growth, financed by borrowing • • • Main Entry: ↑budget …   Useful english dictionary

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