Journal of Economic Development
No. 204 , August 2011, Page 19-26

On The Control Over Fiscal Ambitions

The world economy thus far has witnessed crises of private debts, public debts, and economic recession in many countries in the America and Europe. For example, the early 2007 saw the collapse of the realty market and then in 2008 the massive bankruptcy of banks (i.e. Lehman Brothers on Sept. 17, 2008), insurers, and automobile companies in the USA leading it to a deep recession. Besides, EB and IMF respectively sponsored around €110 billion and €90 billion so as to tackle public debt crises and budget deficits having taken place in Greece in 2009 and Ireland in 2010. Portugal, Spain, and even France and Italy have also shown signs of fiscal volatility. Such the aforementioned facts are of course not sufficient to negate the big role of the government in enhancing the economic growth, environmental protection, and securing social welfare. Yet, if we exagerate effects of the government without having a comprehensive look at the cooperation between the government and the private sector throughout these incidents, the market is just a stage for a one-man show. Long-term and uncontrollable dangers will arise from this show of the government. Therefore, this paper aims to discuss the government's ambition in its fiscal policies (fiscal ambition) which sometimes derives from subjective perspectives on the government's role with the result that the government fails to run the national economy and low-income workers or pensioners will inevitably face tax burdens. After summarizing two schools of economics about fiscal policies, the paper will focus on three sections. The first section considers the rise in public expenditure and budget deficit of governments in EU27 and the USA within the recent period. The second section analyzes Vietnam's fiscal policies from 2004 to 2010. The last section suggests some solutions to control over fiscal ambition in Vietnam, especially the implementation of medium-term expenditure framework.

Fiscal Ambition; Public Debt; Budget Deficit; Expenditure Framework.
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