Trend deficit

The public deficit component that derives from the economic situation and that are not a response to the fiscal action of the government of a country is called the trend deficit .

This type of deficit is also known as a public deficit of a trend nature or type. In turn, the trend deficit is next to the discretionary deficit component of the structural deficit of a particular country. It appears when the level of income is lower than that of expenditures in the public sense within a standard or normal economic environment.

The importance of this type of deficit generally responds to the appearance of common economic phenomena in the advance of economic cycles. A clear example may be the fact that population growth occurs. For this reason the trend deficit is the one most affiliated by its nature to the structural deficit.

The opposite is the trend surplus .

Nature of the trend deficit

While the discretionary deficit explained the part of guilt, in quotes, that a government has in the progress and economic viability of a nation, the trend deficit refers to the important effect that the external economic situation can have on it and that normally It is far from the scope of action of the political leaders of a territory.

However, the concept of public deficit in itself implies that a country operates within a standard economic situation in which it must develop and try to reach a level of full employment or potential production. In that regard, it makes sense then to define to the trend as a deficit typical of normal situations from an economic point of view, as defined above.

by Abdullah Sam
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