In Alberta, it is now illegal for the government to run a deficit. The government of Ontario is considering introducing a similar bill. In the USA, both the Republicans and the President have made balanced-budget a top priority. In Europe, the Maastricht treaty has set very clearly the criteria for the European Monetary Union. A controversial issue such as this cannot be answered satisfactorily by relying on theoretical arguments alone.
Empirical analysis based on hard facts is a necessary complement.
Without going into details since the conference is intended to do just that -i.e, give detailed full arguments and analyses of economic experiences of several countries, I would like to report some important historical facts that bear a particularly significant meaning when we are addressing the issue of budget deficits and economic performance. These facts show that contrary to common belief, budget deficits are not a cause of recession, they are a source of stimuli to the economy. A quick look at the history of public spending since the end of the second World War, shows that increases in the national debt and annual deficits do no harm the economy, they have always helped it. This is so because government deficits are a source of aggregate demand. By keeping aggregate spending at a high level, they prevent businesses from closing down and help workers keep their jobs and incomes, which are used to buy goods and services and that's how a recession can be avoided.