tends to become a deficit, as the tax revenue decreases and unemployment
expenditure increases. During the prosperity, the government budget tends to a
surplus as the tax revenue increases and the unemplyment rate decreases. Thus,
the Keyensian macroeconomic theory suggests that the budgets be balanced
over the business cycle, rather than every year. The new growth theory even
allows the budget deficits over time for the purpose of building future economic
growth.
Figure 1 shows the government budget situation as the ratio of GDP
(hereafter we call it the net budget GDP ratio or simply ratio) in 219 countries/
regions
1
(hereafter we simply call them countries) taken from CIA World Factbook
(2016a, also See Appendix A of this paper). According to the Factbook, "budget
surplus or deficit records the difference between national government revenues
and expenditures, expressed as a percent of GDP. A positive (+) number
indicates that revenues exceeded expenditures (a budget surplus), while a
negative (–) number indicates the reverse (a budget deficit)."
Among the CIA data, the estimates of 182 countries are for 2015, and the
estimates of other 37 countries have different years, ranging from 2005 to 2016.
Since the data do not change in a short period, and since we are interested in
finding Taiwan's position in the world, we include the data for all 219 countries.
Figure 1 draws the scatter diagram of the distribution of the net budge GDP
ratios when the countries are arranged in the decreasing order of the ratios. It
shows that the ratios are concentrated around the zero axis, ranging from -20%
to 20%. However, there are outliers in both ends. They are Tuvalu (#1, 30.1%),
Macau (#2, 14.9%) at the positive end, and on Venezuela (#219, -109.9%), Libya
(#210. -49.3%), Timor-Leste (#217, -42.5), Afghanistan (#216, -23.7%), and
Saudi Arabia (#215, -18.3%) at the negative end.
1
We excluded the European Union (-0.3%) from the dataset to obtain 219 countries/regions.
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