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• W2319997694 abstract "Government budget deficits have increased, along with government revenues from direct and indirect taxation, both in absolute amounts and as a share of national income in Canada, as well as in several other countries, especially since the 1960s. This phenomenon also has coincided, particularly since 1980, with skepticism over the notion that government deficit spending stimulates economic growth and employment. Instead, many now expect deficits to produce negative effects on economic activity, including high real interest rates', reduced real capital formation and production, increased unemployment and possible long-term inflation.2 These expectations have produced a near-concensus on the need to reduce government budget deficits, but not on the means of achieving that goal. Some advocate reductions in government spending as the optimal solution while others call for increases in taxation to raise revenue. Although either policy, in principle, may achieve the same result for the deficit, they arise from different theories of the determinants of government spending. In particular, those who advocate expenditure cuts suggest that increased taxation would increase government spending more than it would reduce the deficit, arguing that there is a causal direction from increased tax revenues to increased government expenditures. Although the taxation-spending causality hypothesis has assumed increased prominence over the last decade 3, little statistical testing has been done for Canada. Studies by Manage and Marlow [18] and Ram [21] lend support to the argument that expenditures are more responsive to revenues than the reverse, on the basis of U.S. data. Indeed Ram's work contradicts the earlier conclu" @default.
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• W2319997694 date "1989-07-01" @default.
• W2319997694 modified "2023-09-25" @default.
• W2319997694 title "On the Difficulty of Eliminating Deficits with Higher Taxes: Some Canadian Evidence" @default.
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• W2319997694 doi "https://doi.org/10.2307/1059052" @default.
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