Endogenous budget is a budget by which all external influences are contained. The budget has the tendency to unfold according to itself as an autonomous budget, but nonetheless it is under external influences as an exogenous budget. When external factors affect the budget, and the accumulation and expenditure of money is out of sync, extra credit is used to recover the balance. If the expenditure is bigger than the income, a credit is taken and there is a budget deficit; if the income is bigger than the expenditure, a credit is given and there is a budget surplus.
Historical Backdrop
• SIMON KUZNETS Proportion of Capital Formation to National Product: savings.
• MILTON FRIEDMAN A Theory of Consumption Function: permanent income hypothesis.
• FRANCO MODIGLIANI and RICHARD BRUMBERG Utility Analysis and the Consumption Function: ‘Life Cycle’ hypothesis.
• FRANCO MODIGLIANI and MERTON MILLER The Cost of Capital, Corporation Finance and The Theory of Investment; Dividend Policy, Growth, and the Valuation of Shares: debt financing or equity financing; dividend policy.
