Structural deficit forms part of the public sector deficit. Structural deficit differs from cyclical deficit in that structural deficit exists even when the economy is at its potential.
Structural deficit issues can only be addressed by explicit and direct government policies: reducing spending, increasing the tax base, and/or increasing tax rates. Countries which have fiat money can also address it by creating more money, although if this continues past the point at which the economy is at its potential, it can lead to inflation. Structural deficit can be described as more "chronic" or long-term in nature than cyclical deficit, hence needing government action to remove it.
While enduring a structural deficit, the government spends money on the future of the country (e.g. infrastructure) these are known as "supply-side policies" – policies which governments use to improve the productive potential of the economy (e.g. infrastruction, transport, education, etc.). If the government thinks that the investment in infrastructure may yield better returns in the long run, they borrow more money for purposes of infrastructure investment. If the borrowed money continues to be more than the revenues generated by the government (through tax and other means), it will cause a structural deficit for the country.
The opposite of a structural deficit is a structural surplus. Likewise, the opposite of a cyclical deficit is a cyclical surplus.
Famous quotes containing the word structural:
“The reader uses his eyes as well as or instead of his ears and is in every way encouraged to take a more abstract view of the language he sees. The written or printed sentence lends itself to structural analysis as the spoken does not because the reader’s eye can play back and forth over the words, giving him time to divide the sentence into visually appreciated parts and to reflect on the grammatical function.”
—J. David Bolter (b. 1951)