Chapter 4


Figure 4.6: Main lines of impact of selected fiscal policies on the food economy*)


*) Numbers in oval boxes mark main lines of impact of the corresponding fiscal policies on meso-
 economic elements. Brackets indicate that there might be indirect impacts on those elements, too.


On the meso-economic level, the policies of public expenditure reduction affect the prices
and the volumes of demand and supply on labour, credit, and commodity markets. and
induce changes in social and economic infrastructural conditions, with substantial
repercussions on household income, food demand and food production. The direction and
the intensity of these effects depend on various factors: the approach to public expenditure
reduction, the specific social and economic conditions of the adjusting country, the time
horizon (short-term versus long-run perspective), and on the eventual outcome and overall
success of the adjustment programme in terms of inducing economic growth.

In the short-term, the effects are likely to be negative, and some people may be adversely
affected in various ways: by losing their job without any opportunity to receive
compensation for income losses and, at the same time, experiencing a real income decline by
having to pay higher prices for food and other basic consumer goods.


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