Economists Want to Limit Expenses by State Skip to content

Economists Want to Limit Expenses by State

Economists have suggested a special regulation be established on how much the state is allowed to spend, which would prevent high expenses during short-term fortunate economic seasons and, to a certain extent, keep the economic management in restraint.

Economists say this strategy would limit projects undertaken when revenue is high and encourage operations in times of economic depression, Morgunbladid reports.

“It is considered good methodology to limit operations when business is good,” said Thórólfur Matthíasson, professor in economics at the University of Iceland. “Many pointed that out when decisions were made on power plants. Their timing was bad considering business cycles.”

“The authorities are supposed to undertake projects during a downswing and save during an upswing,” agreed Ásgeir Jónsson, director of the Kaupthing Bank research department.

Jónsson explained that it is much less expensive for authorities to acquire manpower during an economic depression instead of competing with private businesses during an economic upswing.

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