Fiscal consolidation, budget deficits and the macro economy

Preface Acknowledgements Introduction Fiscal Deficit and Macroeconomic Activity of Central and Subnational Governments Fiscal Deficit, Capital Formation and Crowding Out Deficit–Interest Rate Link and Financial Markets Monetary–Fiscal Policy Coordination: Fiscal Rules and Testing for Monetary Seigniorage Fiscal Seigniorage: Composition of Deficits Fiscal Deficit and Seigniorage Link: Monetary Policy Regimes and Empirical Analysis Fiscal Deficit and Inflation Policy Takeaways: The Revival of Fiscal Activism Bibliography Index

An in-depth analysis set in the context of the ongoing debate on fiscal policy vis-à-vis monetary policy

Is fiscal deficit detrimental to growth rate? Does it create macroeconomic imbalance? If so, is deficit containment a prerequisite for sustained reduction in inflation? Does fiscal deficit crowd out private investment and, if so, to what extent? Does fiscal deficit affect rate of interest?

This book analyses such debates and impacts of fiscal deficit in India, empirically, through macro econometric exercise. Filling an existing gap, it revisits the debate on the macroeconomic effects of deficit by taking India as a case study based on a long-time series analysis from 1980–81 to 2012–13.