Consideration on the Issues of the Balanced Budget Multiplier in the Proportional Tax System
The scholars have put forward their own opinions about whether the balanced budget multiplier should be less than 1 or equal to 1 in proportional tax system.The main divarication is resulted from the different understanding of in the statement of definition of the balanced budget multiplier on the same time variation of net government revenue and government purchase expenditure.Based on the definition of the balanced budget multiplier and taking consideration of time factor introduced in the deduction of tax multiplier,the time factors should also be taken into account when calculating the balanced budget multiplier.Therefore,the time consistency principle is the basic premise in ensuring correct calculation of the balanced budget multiplier.