Mr. Khalid, Senior Economist in the Fiscal Affairs Department, is a graduate of Khartoum University and of the University of Saskatchewan. He was formerly with the United Nations Fiscal and Financial Branch. He also served as UN fiscal expert in Somalia and was on the faculty of the Institute of National Planning in Cairo.
See the Report of the President’s Commission on Budget Concepts (Washington, October 1967).
There is extensive literature on this topic. The reader is referred to any of the numerous textbooks on macroeconomics. For an early exposition that takes into consideration how fiscal policy grew out of modern economic theory and experience, see The New Economics: Keynes’ Influence on Theory and Public Policy, ed. by Seymour E. Harris (New York, 1947); see also Arthur Smithies, “Federal Budgeting and Fiscal Policy,” in A Survey of Contemporary Economics, ed. by Howard S. Ellis (Philadelphia, 1948), pp. 174-209.
The phrase, and to a large extent the concept, was first introduced by Abba P. Lerner in “Functional Finance and the Federal Debt,” Social Research, Vol. 10 (1943), p. 39.
For a detailed study of the fluctuation of export earnings of developing countries, see United Nations, Department of Economic Affairs, Instability in Export Markets of Under-Developed Countries (E/2047/Rev. 1, ST/ECA/15), New York, September 1952, and Relative Prices of Exports and Imports of Underdeveloped Countries (Sales No.: 1949.II.B.3), Lake Success, N.Y., December 1949. See also Alasdair I. MacBean, “The Short-Term Consequences of Export Instability to Underdeveloped Countries,” Public Policy (Harvard University Press, 1964), pp. 170-99.
Other measures of stabilization that may be said to be part of fiscal policy and that are not dealt with here include the use of government marketing agencies for the stabilization of the income of primary producers. For a discussion of the relationship between such stabilization schemes and fiscal policy in general, see P. T. Bauer and F. W. Paish, “The Reduction of Fluctuations in the Incomes of Primary Producers,” The Economic Journal, Vol. LXII (1952), pp. 750-80.
See Jeffrey G. Williamson, “Public Expenditure and Revenue: An International Comparison,” The Manchester School of Economic and Social Studies, Vol. XXIX (1961), pp. 43-56; N.T. Wang, “Some Problems of International Comparison of Public Social Expenditures,” The Indian Economic Review, Vol. II (February 1955), pp. 23-52.
A full account of the theory of built-in stabilizers is given by Richard A. Musgrave, The Theory of Public Finance: A Study in Public Economy (New York, 1959), Chapter 21, pp. 501-25.
See Richard Goode, George E. Lent, and P.D. Ojha, “Role of Export Taxes in Developing Countries,” Staff Papers, Vol. XIII (1966), pp. 453-503.
For a further discussion of the efficacy of fiscal policies in developing countries, see Richard Goode, “Impact of Fiscal Measures,” in Fiscal and Monetary Problems in Developing States, ed. by David Krivine (New York, 1967). pp. 238-52.
There are various ways in which the simplified scheme presented in the text can be elaborated or improved upon for analytical purposes. For different examples and a much more comprehensive scheme of government accounts that involve imputations for such items as depreciation and pension liabilities, see United Nations, Department of Economic and Social Affairs, A Manual for Economic and Functional Classification of Government Transactions (Sales No.: 58.XVI.2), New York, 1958. In the last analysis, a scheme of classification should be decided upon on a practicable basis and in relation to the needs and capabilities of each country.
For an excellent discussion of the relationship between current and capital expenditure in development planning, see W. Arthur Lewis, “Planning Public Expenditure,” National Economic Planning (National Bureau of Economic Research, Columbia University Press, 1967).
United Nations, Economic Commission for Latin America, A Manual for Programme and Performance Budgeting (E.CN.12/BRW.2/L.5), May 1962, p. 17.
United Nations, A Manual for Economic and Functional Classification of Government Transactions (cited in footnote 10).
For an extensive discussion of the budget’s role in planning and the inadequacy of traditional budgetary techniques, see Albert Waterston, Development Planning: Lessons of Experience (Baltimore, Maryland, 1965), pp. 201-48.
For a discussion of identification of programs within an agency, see United Nations, A Manual for Programme and Performance Budgeting (cited in footnote 12), paras. 38-42, pp. 20-21.
Roland N. McKean and Melvin Anshen, “Problems, Limitations, and Risks,” Program Budgeting: Program Analysis and the Federal Budget, ed. by David Novick (A Rand Corporation-Sponsored Research Study, Washington, 1965), pp. 218-36.
See Ursula K. Hicks, Development Finance: Planning and Control (Oxford University Press, 1965), pp. 18-23.
For a very lucid exposition of the physical and economic constraints of planning in less developed countries, see Andrew M. Watson and Joel B. Dirlan, “The Impact of Underdevelopment on Economic Planning,” The Quarterly Journal of Economics, Vol. LXXIX (1965), pp. 167-94.
A discussion of general principles and examples of particular applications of cost-benefit techniques is given by A.R. Prest and R. Turvey, “Cost-Benefit Analysis: A Survey,” The Economic Journal, Vol. LXXV (1965), pp. 683-731.
See Gene H. Fisher, “The Role of Cost-Utility Analysis in Program Budgeting,” in Program Budgeting (cited in footnote 16), pp. 39-40.
The discount rate, of course, should not be confused with the interest rate. Interest is one item of cost and often a minor one. The fact that a loan for a particular project can be secured at a low interest rate does not necessarily make the project worthwhile. The efficiency of the project depends on the total cost and benefits. See M.S. Feldstein, “The Social Time Preference Discount Rate in Cost Benefit Analysis,” The Economic Journal, Vol. LXXIV (1964), pp. 360-79.
Alan T. Peacock, “Economic Analysis and Government Expenditure Control,” pp. 1-16, and Ursula K. Hicks, “Epilogue: Choice, Efficiency and Control in the Public Services,” pp. 146-63, in Public Expenditure: Appraisal and Control, ed. by Alan T. Peacock and D.J. Robertson (Edinburgh and London, 1963).
See H.J. Hofstra, New Techniques of Budget Preparation and Management: General Report (International Institute of Administrative Sciences, Brussels, 1965). This was prepared on the basis of reports from 24 countries and submitted to the Thirteenth International Congress of Administrative Sciences, which was held in Paris, July 20-23, 1965.