What Are Fiscal Variables?

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Fiscal variables are involved in fiscal policies.
Fiscal variables are involved in fiscal policies. (Image: Thinkstock/Comstock/Getty Images)

Businesses and governments perform analysis on financial data to gain insight and find areas for improvement. Through this analysis, the funds that flow into and out of entities provide governments and others with information on activities and expectations that influence these fiscal variables. This results in new insights into methods to control specific variables and enhance financial results.

Definition

Fiscal usually relates to financial transactions, especially those regarding government regulation of funds through taxation. Fiscal can also denote anything relating to financial issues, such as a fiscal crisis, or it can describe a time period for recording business performance, such as a fiscal year.

The fiscal variable terminology describes certain types of financial data. The data may be financial information for a school, company, state, country or group of entities. This data might vary over time due to internal or external influences. Various types of financial insight and support for budgets and forecasts can come from observing the forces that influence changes in fiscal variables. Most fiscal variables consist of different types of revenues or expenses.

Revenue Variables

Using a school as an example, items that qualify as fiscal variables include revenue from local sources such as property taxes, and revenue from other taxable transactions such as food service, tuition, textbook sales and student activities. Another fiscal variable would be revenue that comes from the state, including payments for special programs such as gifted, adult education or vocational curricula. Schools may also receive revenue in the form of grants from the federal government, which may vary from one year to the next depending on the need or other basis for the grant.

Expense Variables

Staying with the school example, fiscal variables may also represent expenditures. This includes salaries and benefits for teachers, salaries and benefits for all support staff and student support costs such as health and guidance services. Additionally, operational and maintenance costs include expenses to provide special services such as speech or gifted programs. Non-operational expenses such as costs to acquire and build new facilities are included, as well as the cost of maintaining all of the buildings on campus.

Fiscal Variables in Analysis

Fiscal variables play a part in many different types of economic analysis. For example, the Federal Reserve might perform a regression analysis using fiscal variables that include growth in gross domestic product, or GDP, and inflation variables. Analysis and experiments may also be performed using data from several countries to measure how consumer expectations regarding fiscal variables can have an affect on their governments' fiscal policies.

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