What Is a Fiscal Agent? A fiscal agent is an organization, such as a bank or trust company, that acts on behalf of another party performing various financial duties. A fiscal agent may assist in the redemption of bonds or coupons, handle tax issues, replace lost or damaged securities, and perform various other finance-related tasks. Key
What Is Fiscal Capacity? Fiscal capacity, in economics, is the ability of government, groups, institutions, etc. to generate revenue. The fiscal capacity of governments depends on a variety of factors including those that contribute to the tax base; the government’s ability to efficiently tax; compensating behavior among taxed individuals, markets, and asset prices; and access
What Is a Fiscal Cliff? The fiscal cliff refers to a combination of expiring tax cuts and across-the-board government spending cuts that create a looming imbalance in the federal budget and must be corrected to avert a crisis. The idea behind the fiscal cliff was that if the federal government allowed these two events to
What Is a Fiscal Deficit? A fiscal deficit is a shortfall in a government’s income compared with its spending. The government that has a fiscal deficit is spending beyond its means. A fiscal deficit is calculated as a percentage of gross domestic product (GDP), or simply as total dollars spent in excess of income. In
What Is Fiscal Drag? Fiscal drag is an economic term whereby inflation or income growth moves taxpayers into higher tax brackets. This in effect increases government tax revenue without actually increasing tax rates. The increase in taxes reduces aggregate demand and consumer spending from taxpayers as a larger share of their income now goes to
What Is Fiscal Imbalance? Fiscal imbalance occurs when a government’s future debt obligations are not in balance with its future income streams. There are two types of imbalances that can impact a government’s expenditures and revenue: vertical fiscal imbalance and horizontal fiscal imbalance. Obligations and income streams are measured at their respective present values and
What Is the Fiscal Multiplier? The fiscal multiplier measures the effect that increases in fiscal spending will have on a nation’s economic output, or gross domestic product (GDP). In general, economists define fiscal multipliers as the ratio of a change in output to a change in tax revenue or government spending. Fiscal multipliers are important
What Is Fiscal Neutrality? Fiscal neutrality refers to a principle or goal of public finance that fiscal decisions (taxing, spending, or borrowing) of a government can or should avoid distorting economic decisions by businesses, workers, and consumers. A policy change can be considered to be neutral to the economy in either a macro- or microeconomic
What Is Fiscal Policy? Fiscal policy refers to the use of government spending and tax policies to influence economic conditions, especially macroeconomic conditions. These include aggregate demand for goods and services, employment, inflation, and economic growth. During a recession, the government may lower tax rates or increase spending to encourage demand and spur economic activity.
What Is Fiscal Year-End? The term “fiscal year-end” refers to the completion of any one-year or 12-month accounting period other than a typical calendar year. A fiscal year is often the period used for calculating annual financial statements. A company’s fiscal year may differ from the calendar year, and may not close on December 31
