Fiscal Policy

FISCAL POLICY

Fiscal policy refers primarily to revenue administration, expenditure and public sector financing. Fiscal policy, then, is the state strategies implemented, not only to generaterevenue, but also to efficiently manage these resources.
Generally, the word is confused with tax, precisely because, much of the state's revenue comes from taxes, as in nature, the state is not a goodgenerator of wealth such as private enterprise.
Fiscal policy is the policy that the public sector continues to respect its decisions on spending, taxes and debt. This policy aims to facilitate andencourage the good performance of the economy to achieve national or outstanding acceptable levels of growth, inflation and unemployment, among other variables. It also seeks to prevent fluctuationsin the economy.
The tools that fiscal policy has to meet its targets relate to income and expenses for which the state influences. From the point of view of income, the government can control whoand how much tax was paid, while you may develop mechanisms to ensure payment of these(anti-avoidance), etc. From the point of view of expenditure, the state can influence the level of wages,increasing them year after year, the contracts and the money is transferred to departments and municipalities or other entities, etc.
Let's see what the decision that the state can take on fiscal policy fora specific situation of the country's economy: If there is a situation where the economy is stagnant, the consumption is low and companies can’t produce at full capacity The Government may seek toencourage consumption by reducing taxes that are charged to the public, therefore, people have more disposable income to buy goods and services and consume in general, on the other hand, the statebeing the largest consumer, it can spend more money in the economy through investments or other expenditures that encourage production companies.
Fiscal policies can be classified into two groups:...