From a macroeconomic perspective, the stance of federal fiscal policy can be summarized by movements in the primary deficit as a share of GDP. The primary deficit is the difference between federal government spending, excluding debt interest payments, and revenue. Historically, the deficit has been highly countercyclical, meaning that it rises during economic slowdowns and falls during expansions.
I think it is not by chance that some of the main macro-indicators that are being monitored in the European Union are the deficit/GDP and government debt/GDP - part of the so-called Maastricht criteria. Their dynamics is of great importance for the assessment of fiscal policy in the member states, allowing also forecasting of future problems with fiscal stimulus.
Thank you for your contribution. The unified monetary policy might have implication on domestic monetary policy formation. However, persistence fiscal expansion cannot be ignore but fiscal discipline might be necessary.
Dear Olatunji,
I am not sure I understand your question. What is "the old woman's advice?"
Ok, I agree.
Just for info, the fiscal stance or budget sustainability, under the EU Stability and growth pact, is (primarily) summarized by the -cyclically- adjusted budget balance (deficit/surplus) and the -cyclically- adjusted expenditure growth. You can find more information here:
https://ec.europa.eu/info/publications/economy-finance/vade-mecum-stability-and-growth-pact-2017-edition_en