Journal Article Customs Union from a Single-Country Viewpoint Get access Franz Gehrels Franz Gehrels Bloomington, Indiana Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 24, Issue 1, 1956, Pages 61–64, https://doi.org/10.2307/2296237 Published: 01 July 1956

1CONOMISTS are generally aware of the impact of fiscal policy on the income stream and have prescribed the appropriate fiscal measures for expanding or contracting the flow of income. They have also given attention to the expenditure-stabilizing effect of the net stock of privately-held salable assets, when levels of prices and income fluctuate. However, they have paid little attention to the role of fiscal policy as a generator or destroyer of such assets. A budgetary surplus or deficit always has an impact on the balance sheets of the private sector, in addition to its impact on the income-expenditure accounts. This discussion is devoted to the effect of fiscal policy on the asset items in private balance sheets and the implications of this for the generation of income. The first section attempts to show that the government debt is one of the variables determining household expenditure decisions. From this it is shown that fiscal deficits or surpluses have cumulative effects on national income which are not present for corresponding magnitudes of private expenditure. The second section considers how the public debt should behave in order to keep national income growing at the full-employment level. It shows not only that the public debt must continue to grow in order to maintain full employment, but that for many rates of real income growth it must grow at a faster rate than income itself, given the model here considered.

T HE upheavals in Eastern Europe make it more than usually timely to examine some aspects of the postwar economic development of this area. This discussion is devoted to the mechanism of trade among the Eastern European countries and will attempt to give some evaluation of its efficiency. Section I provides some background on developments in the area since I945; section II discusses data on the volume and pattern of trade and on currentaccount balances; section III describes how the volume, composition, direction, and terms of trade are determined by the state planners; and section IV evaluates the efficiency of the system as presently operated.