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Fiscal Rules Inertia And Discretionary Fiscal Policy
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Book Synopsis Fiscal Rules, Inertia and Discretionary Fiscal Policy by : Martin Larch
Download or read book Fiscal Rules, Inertia and Discretionary Fiscal Policy written by Martin Larch and published by . This book was released on 2008 with total page 23 pages. Available in PDF, EPUB and Kindle. Book excerpt: In current practice, changes in the cyclically-adjusted budget balance (CAB) are interpreted as reflecting the effort of discretionary fiscal policy. This paper shows that such an interpretation is not a sufficiently accurate description of the behaviour of fiscal policy, as, in some cases, it may conceal an important deficit bias. Specifically, as growth projections are an important building block of budgetary plans, systematic optimism in forecasting growth, coupled with pervasive lags and inertia in the implementation phase of the budget, will result in a fiscal expansion compared to plans, even in the absence of discretionary measures. In order to track down this kind of passive behaviour in the light of growth surprises or sanguine growth assumptions the traditional reading of the CAB needs to be adjusted. This is achieved by relaxing the benchmark assumption according to which, under unchanged fiscal policy, the deficit-to-GDP ratio is invariant to growth. An empirical application to public finance data of four large EU countries shows that passive behaviour is an important element in practice, as forecast errors are significant in explaining changes in the CAB. Moreover, in some cases official growth forecasts appear to have a clear upward bias.
Book Synopsis Deep Roots of Fiscal Behavior by : Mr.Serhan Cevik
Download or read book Deep Roots of Fiscal Behavior written by Mr.Serhan Cevik and published by International Monetary Fund. This book was released on 2014-03-12 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the determinants of fiscal policy behavior and its time-varying volatility, using panel data for a broad set of advanced and emerging market economies during the period 1990–2012. The empirical results show that discretionary fiscal policy is influenced by policy inertia, the level of public debt, and the output gap in both advanced and emerging market economies. In addition, the paper finds that macro-financial factors—such as real exchange rate, financial development, interest rates, asset prices, and natural resource rents—and demographic and institutional factors—such as the old-age dependency ratio, the quality of institutions, and policy anchors such as fiscal rules and IMF-supported stabilization programs—tend to have a significant effect on fiscal policy behavior. The results also indicate that higher government debt leads to more volatile fiscal behavior, while fiscal rules and higher institutional quality reduce the volatility of fiscal policy over time.
Book Synopsis Fiscal Rules, Inertia and Discretionary Fiscal Policy by : Martin Larch
Download or read book Fiscal Rules, Inertia and Discretionary Fiscal Policy written by Martin Larch and published by . This book was released on 2003 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recoge: 1. Introduction - 2. The cyclically-adjusted primary budget balance as indicator of discretionary fiscal policy - 3. Empirical analysis: active versus passive fiscal policy - 4. Discussion - 5. Summary and conclusions.
Book Synopsis Fiscal Policy Rules by : Mr.George Kopits
Download or read book Fiscal Policy Rules written by Mr.George Kopits and published by International Monetary Fund. This book was released on 1998-07-22 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: What are fiscal policy rules? What are the principal benefits and drawbacks associated with various fiscal rules, particularly compared with alternative approaches to fiscal adjustment? Can fiscal rules contribute to long-run sustainability and welfare without sacrificing short-run stabilization? If so, what characteristics of fiscal rules make this contribution most effective? And in what circumstances and contexts, if any should the IMF encourage its member countries to adopt fiscal rules? This paper seeks to identify sensible fiscal policy rules that can succeed, if chosen by a member country, as an alternative to descretionary fiscal rules.
Book Synopsis Deep Roots of Fiscal Behavior by : Serhan Cevik
Download or read book Deep Roots of Fiscal Behavior written by Serhan Cevik and published by . This book was released on 2017 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the determinants of fiscal policy behavior and its time-varying volatility, using panel data for a broad set of advanced and emerging market economies during the period 1990-2012. The empirical results show that discretionary fiscal policy is influenced by policy inertia, the level of public debt, and the output gap in both advanced and emerging-market economies. In addition, the paper finds that macro-financial factors (such as real exchange rate, financial development, interest rates, asset prices, and natural resource rents) and demographic and institutional factors (such as the old-age dependency ratio, the quality of institutions, and policy anchors such as fiscal rules and IMF-supported stabilization programs) tend to have a significant effect on fiscal policy behavior. The results also indicate that higher government debt leads to more volatile fiscal behavior, while fiscal rules and higher institutional quality reduce the volatility of fiscal policy over time.
Book Synopsis Fiscal Rules in Response to the Crisis by : Ms.Andrea Schaechter
Download or read book Fiscal Rules in Response to the Crisis written by Ms.Andrea Schaechter and published by International Monetary Fund. This book was released on 2012-07-01 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: Strengthening fiscal frameworks, in particular fiscal rules, has emerged as a key response to the fiscal legacy of the crisis. This paper takes stock of fiscal rules in use around the world, compiles a dataset - covering national and supranational fiscal rules, in 81 countries from 1985 to end-March 2012 - and presents details about the rules’ key design elements, particularly in support of enforcement. This information is summarized in a set of fiscal rules indices. Three key findings emerge: (i) many new fiscal rules have been adopted and existing ones strengthened in response to the crisis; (ii) the number of fiscal rules and the comprehensiveness of the design features in emerging economies has caught up to those in advanced economies; and (iii) the "next-generation" fiscal rules are increasingly complex as they combine the objectives of sustainability and with the need for flexibility in response to shocks, thereby creating new challenges for implementation, communication, and monitoring.
Book Synopsis Fiscal Rules in a Volatile World by : Carlos Garcia
Download or read book Fiscal Rules in a Volatile World written by Carlos Garcia and published by International Monetary Fund. This book was released on 2011-03-01 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: It is widely agreed that a fiscal rule should boost discipline and credibility, reduce macroeconomic volatility, and be easily understood. To support such goals, a government may run structural surpluses and accumulate a precautionary cushion of assets on behalf of agents who do not enjoy access to capital markets. As an additional criterion, that level of assets should be bounded. We provide an example of a structural surplus rule that satisfies all such criteria. In our general equilibrium simulations, we show that such a rule benefits credit-constrained consumers but may hurt others.
Book Synopsis Fiscal Policy in the U. S. by : Glenn Follette
Download or read book Fiscal Policy in the U. S. written by Glenn Follette and published by DIANE Publishing. This book was released on 2011-04 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: Examines the effects of the economy on the gov¿t. budget as well as the effects of the budget on the economy. Provides measures of the effects of automatic stabilizers on budget outcomes at the fed., state and local levels. At the fed. level, the deficit increases about 0.35% of GDP for each 1 percentage point deviation of actual GDP relative to potential GDP. For state and local gov¿t., the deficit increases by 0.1% of GDP. Examines the response of the economy to the automatic stabilizers by comparing the response to aggregate demand shocks. The authors find that federal policy actions are somewhat counter-cyclical while state and local policy actions have been somewhat pro-cyclical. Illustrations. This is a print on demand publication.
Book Synopsis Flexible Fiscal Rules and Countercyclical Fiscal Policy by : Ms.Martine Guerguil
Download or read book Flexible Fiscal Rules and Countercyclical Fiscal Policy written by Ms.Martine Guerguil and published by International Monetary Fund. This book was released on 2016-01-22 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper assesses the impact of different types of flexible fiscal rules on the procyclicality of fiscal policy with propensity scores-matching techniques, thus mitigating traditional self-selection problems. It finds that not all fiscal rules have the same impact: the design matters. Specifically, investment-friendly rules reduce the procyclicality of both overall and investment spending. The effect appears stronger in bad times and when the rule is enacted at the national level. The introduction of escape clauses in fiscal rules does not seem to affect the cyclical stance of public spending. The inclusion of cyclical adjustment features in spending rules yields broadly similar results. The results are mixed for cyclically-adjusted budget balance rules: enacting the latter is associated with countercyclical movements in overall spending, but with procyclical changes in investment spending. Structural factors, such as past debt, the level of development, the volatility of terms of trade, natural resources endowment, government stability, and the legal enforcement and monitoring arrangements backing the rule also influence the link between fiscal rules and countercyclicality. The results are robust to a wide set of alternative specifications.
Book Synopsis Fiscal Rules and Countercyclical Policy by : Mr.Evan Tanner
Download or read book Fiscal Rules and Countercyclical Policy written by Mr.Evan Tanner and published by International Monetary Fund. This book was released on 2003-11-01 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: Fiscal rules—legal restrictions on government borrowing, spending, or debt accumulation (like the Gramm-Rudman-Hollings Act in the United States)—have recently been adopted or considered in several countries, both industrial and developing. Previous literature stresses that such laws restrict countercyclical government borrowing, thus preventing intertemporal equalization of marginal deadweight losses of taxation—an idea associated with Frank Ramsey. However, such literature typically abstracts from persistent current deficits that are financed by future tax increases. Eliminating such deficits may substantially reduce tax rate variability—the very goal of countercyclical borrowing—even over a finite horizon. Thus, Gramm-Rudman-Hollings and Frank Ramsey are not necessarily enemies and they may even be good friends!
Book Synopsis Fiscal Rules at a Glance by : Mrs.Nina Budina
Download or read book Fiscal Rules at a Glance written by Mrs.Nina Budina and published by International Monetary Fund. This book was released on 2012-11-14 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides country-specific information on fiscal rules in use in 81 countries from 1985 to end-September 2012. It serves as background material and update of the July 2012 Working Paper “Fiscal Rules in Response to the Crisis—Toward the ‘Next Generation’ Rules: A New Dataset” and is also available in an easy accessible electronic data visualization tool (http://www.imf.org/external/datamapper/FiscalRules/map/map.htm.).The dataset covers four types of rules: budget balance rules, debt rules, expenditure rules, and revenue rules, applying to the central or general government or the public sector. It also presents details on various characteristics of rules, such as their legal basis, coverage, escape clauses, as well as key supporting features such as independent monitoring bodies.
Book Synopsis Fiscal Rules—Anchoring Expectations for Sustainable Public Finances by : International Monetary Fund. Fiscal Affairs Dept.
Download or read book Fiscal Rules—Anchoring Expectations for Sustainable Public Finances written by International Monetary Fund. Fiscal Affairs Dept. and published by International Monetary Fund. This book was released on 2009-12-11 with total page 73 pages. Available in PDF, EPUB and Kindle. Book excerpt: The sharp increase in fiscal deficits and public debt in most advanced and several developing economies has raised concerns about the sustainability of public finances and highlighted the need for a significant adjustment over the medium term. This paper assesses the usefulness of fiscal rules in supporting fiscal consolidation, discusses the design and implementation of rules based on a new data base spanning the whole Fund membership, and explores the fiscal framework that could be adopted as countries emerge from the crisis.
Book Synopsis The Fiscal Smile by : Maria Antoinette Silgoner
Download or read book The Fiscal Smile written by Maria Antoinette Silgoner and published by International Monetary Fund. This book was released on 2003-09-01 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the smoothing impact of fiscal stabilizers (proxied by government expenditures or revenues) on business cycle volatility for a panel of EU countries in the period 1970-99. The results show that the business cycle volatility smoothing effect of fiscal stabilizers may revert at high levels. We present evidence that for government expenditure ratios exceeding an estimated value of about 38 percent, a further expansion in the size of the government could actually lead to an increase in cyclical volatility. This may call for a reconsideration of the use of fiscal stabilizers for business cycle smoothing.
Book Synopsis Fiscal Rules and the Sovereign Default Premium by : Juan Carlos Hatchondo
Download or read book Fiscal Rules and the Sovereign Default Premium written by Juan Carlos Hatchondo and published by International Monetary Fund. This book was released on 2012-01-01 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper finds optimal fiscal rule parameter values and measures the effects of imposing fiscal rules using a default model calibrated to an economy that in the absence of a fiscal rule pays a significant sovereign default premium. The paper also studies the case in which the government conducts a voluntary debt restructuring to capture the capital gains from the increase in its debt market value implied by a rule announcement. In addition, the paper shows how debt ceilings may reduce the procyclicality of fiscal policy and thus consumption volatility.
Book Synopsis How to Measure the Fiscal Deficit by : Mario I. Bléjer
Download or read book How to Measure the Fiscal Deficit written by Mario I. Bléjer and published by International Monetary Fund. This book was released on 1993 with total page 412 pages. Available in PDF, EPUB and Kindle. Book excerpt: Fiscal policy seeks to equilibrate the public sector's financing needs with the private sector's demand for investment and a sustainable balance of payments. Correct measurement of the public sector's net use of resources is therefore an important prerequisite for managing the macroeconomy. This volume, edited by Mario I. Blejer and Adrienne Cheasty, is organized around four issues: the adequacy of summary measures of the fiscal deficit, conventional and adjusted deficits, coverage (size) of the public sector, and the public sector's intertemporal budget constraint.
Book Synopsis Fiscal policy under rules and restrictions by : Marcos Poplawski Ribeiro
Download or read book Fiscal policy under rules and restrictions written by Marcos Poplawski Ribeiro and published by Rozenberg Publishers. This book was released on 2008 with total page 316 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Restraining Yourself by : Mr.Tamim Bayoumi
Download or read book Restraining Yourself written by Mr.Tamim Bayoumi and published by International Monetary Fund. This book was released on 1994-07-01 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: State budgets in the United States played a significant macroeconomic role in the 1970s and 1980s, and the level of cyclical responsiveness was affected by the severity of statutory and constitutional fiscal restraints. Moving from no fiscal restraints to the most stringent restraints lowered the fiscal offset to income fluctuations by around 40 percent. Simulations indicate that a reduction in aggregate fiscal stabilizers of this size could lead to a significant increase in the variance of aggregate output.
