Financial policy

Fiscal policy is a central instrument of state control that influences a country's economic stability, growth and social justice. This text explains the key aspects of fiscal policy, its tasks, the players involved and the various instruments used to achieve these goals. Read the latest news on fiscal policy from the Table.Briefings editorial team here. Fiscal policy: simply explained Fiscal policy refers to the measures taken by a state with the aim of controlling public finances and influencing the economy. This includes setting taxes, government spending and taking on debt. The aim of fiscal policy is to promote economic stability, secure employment, reduce inequalities and achieve sustainable growth. It can be expansionary to stimulate the economy or restrictive to combat inflation. Fiscal policy is often conducted in close coordination with monetary policy in order to achieve a country's macroeconomic goals. What are the tasks of fiscal policy? The tasks of fiscal policy include the control and management of a state's public finances in order to promote economic stability and growth. A central task is the structuring of the national budget, whereby revenue (e.g. taxes) and expenditure (e.g. investments in infrastructure, education, health) are planned in such a way that they support the economic goals. Another aim of fiscal policy is to manage the economy. In times of economic recession, the state can stimulate demand through increased spending or tax cuts (expansionary fiscal policy). Conversely, when the economy is overheating, demand can be curbed by cutting spending or raising taxes (restrictive fiscal policy). Fiscal policy also plays an important role in the redistribution of income and wealth in order to promote social justice. Finally, it serves to secure public finances in the long term by pursuing a sustainable debt policy and keeping public debt at a sustainable level. What are the different pillars of fiscal policy? There are various bodies responsible for planning, implementing and monitoring government financial measures. The most important agencies are: These agencies often work together to ensure a coherent and effective fiscal policy. What instruments does fiscal policy use? Fiscal policy uses various instruments to achieve its objectives: These instruments are used flexibly depending on the economic situation and political objectives. What is the difference between financial policy and fiscal policy? Fiscal policy and financial policy are often used interchangeably, but differ in their scope and focus. Fiscal policy encompasses all government measures related to public finances. This includes not only the setting of taxes and government spending, but also the management of government debt, subsidy policy and the regulation of financial markets. Fiscal policy is therefore a broader term that covers the entire range of government interventions in the economy via the budget and other financial instruments. Fiscal policy, on the other hand, is more specific and focuses on the targeted management of economic activity through the adjustment of tax revenues and public spending. The main aim of fiscal policy is to smooth out economic fluctuations, i.e. to stimulate the economy in a recession by increasing spending or to curb inflation by cutting spending in boom phases. In short, fiscal policy is a sub-area of financial policy that focuses specifically on influencing the economy through government spending and taxes. What is a sustainable fiscal policy? A sustainable fiscal policy aims to shape public finances in such a way that long-term economic stability and social justice are guaranteed without burdening future generations. This means that the state strikes a balance between revenue and expenditure while avoiding excessive debt. Important aspects of a sustainable financial policy are The aim is to meet current needs without jeopardizing the resources and opportunities of future generations.