Fiscal crisis

Unless otherwise defined, a fiscal crisis is defined as a situation in which a country’s public finances have reached a debt limit that leads to serious disruptions within the economy as a whole. – Every budget crisis requires the government to take unwelcome measures in advance, such as cutting social benefits, eliminating public sector jobs or raising taxes. Politicians who want to be re-elected therefore have every reason to manage prudently and avoid a budget crisis. – By contrast, politicians who can expect other governments – or even, as in the euro area, the central bank – to provide them with financial assistance in the event of a budget crisis will manage with less discipline. Expected help from other countries therefore prevents the incentive to achieve financial equilibrium. It will allow careless politicians to conceal the true state of public finances and avoid any measures that could jeopardize their re-election. – See buyouts, central banking, bail-out, blame game, deficit financing ban, Greek crisis, liability, fiscal deficit, fiscal ratios, fiscal consolidation, control account, moral hazard, semester, European, solidarity, financial, sovereign debt crisis, Stability and Growth Pact, treaty compliance. – Cf. Deutsche Bundesbank Monthly Report of November 2012, p. 22 ff. (Government budget deficits in the euro area as a whole and in the problem countries; overviews).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk
https://www.jung-stilling-gesellschaft.de/merk/
https://www.gerhardmerk.de/