The nominal deficit is the difference between government expenditures and receipts, so an increase in taxes will decrease the nominal deficit.
Cyclically adjusted balance (CAB) Difference between the overall balance and the automatic stabilizers; equivalently, an estimate of the fiscal balance that would apply under current policies if output were equal to potential. Cyclically adjusted primary balance.
Cyclical deficits are the kind of deficit you run when you lose your job: you've had a temporary income shock, and so you're going to be spending more than you take in.
The cyclical deficit occurs as part of the business cycle. When the economy is expanding and growing, tax receipts go up and government spending goes down decreasing the cyclical deficit. When the economy is doing poorly the opposite occurs: tax receipts drop and spending goes up, and the cyclical deficit increases.
Subtract "R" from the federal budget deficit to obtain the cyclically-adjusted budget deficit. If you are analyzing state-level budget deficits, subtract both "R" and "U" from the state budget deficit to obtain the cyclically-adjusted budget deficit on the state level.
2. The cyclical deficit occurs because of a business cycle. It is the difference between the actual budget deficit and the natural employment deficit. The structural deficit is the deficit that remains after the effect of the business cycle is separated out.
Cyclical deficit. the part of the deficit that exists because the economy is operating below its potential level of output. (Also known as the passive deficit) When the economy is working above its potential, it has a cyclical surplus.
The calculation of the cyclical component of the budget involves assessing the impact of the difference between the level of structural GDP and the actual/projected level of GDP on those aspects of the budget affected by the economic cycle.
A cyclically adjusted deficit is a budget deficit caused by a slowing economy rather than fiscal policies such as increasing discretionary spending or decreasing the tax rates.
The two main causes of a budget deficit are excessive government spending and low levels of taxation that don't cover expenditure. Tax cuts can cause declines in revenue can result in a budget deficit, or, a massive fiscal stimulus can increase government spending over and above the income it receives.
Cyclical economic change. frequent periods of boom and bust in economies. Structural economic change: dramatic shift in the way a country operates, usually brought on by major economic/ technological developments, less frequent.
Primary deficit refers to the difference between the current year's fiscal deficit and interest payment on previous borrowings. It indicates the borrowing requirements of the government, excluding interest. It also shows how much of the government's expenses, other than interest payment, can be met through borrowings.
The incremental price increase of goods and services in an economy is highly cyclical and can pose its own risk to investors, while also causing cyclical risks in the economy.
Cyclical stocks represent companies that make or sell discretionary items and services that are in demand when the economy is doing well. They include restaurants, hotel chains, airlines, furniture, high-end clothing retailers, and automobile manufacturers.
Since falling rates normally stimulate the economy, cyclical stocks fare best when interest rates are falling. Conversely, in times of rising interest rates, cyclical stocks fare poorly. But it's important to keep in mind that the first year of falling interest rates may not be the right time to buy.
A cyclically balanced budget is a budget that is not necessarily balanced year-to-year, but is balanced over the economic cycle, running a surplus in boom years and running a deficit in lean years, with these offsetting over time.