[PDF] Fiscal Rules In A Volatile World eBook

Author : Carlos Garcia
Publisher : International Monetary Fund
Page : 44 pages
File Size : 41,32 MB
Release : 2011-03-01
Category : Business & Economics
ISBN : 1455221007

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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.

Author : Marina Halac
Publisher :
Page : 53 pages
File Size : 26,3 MB
Release : 2018
Category : Fiscal policy
ISBN :

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Governments are present-biased toward spending. Fiscal rules are deficit limits that trade off commitment to not overspend and flexibility to react to shocks. We compare coordinated rules -- chosen jointly by a group of countries -- to uncoordinated rules. If governments' present bias is small, coordinated rules are tighter than uncoordinated rules: individual countries do not internalize the redistributive effect of interest rates. However, if the bias is large, coordinated rules are slacker: countries do not internalize the disciplining effect of interest rates. Surplus limits enhance welfare, and increased savings by some countries or outside economies can hurt the rest.

Author : Mr.Jiro Honda
Publisher : International Monetary Fund
Page : 53 pages
File Size : 24,45 MB
Release : 2017-09-12
Category : Business & Economics
ISBN : 148430957X

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Over the past decade, Lesotho and Swaziland have faced significant volatility in their fiscal revenues, owing to highly unstable Southern African Customs Union (SACU) receipts. Based on model analysis, this paper explores the advantages of implementing fiscal rules to deal with such volatility. It finds that the use of a structural balance target could smooth the growth impact from revenue shocks while helping preserve sufficient international reserves during bad times. From a long-term perspective, it suggests possible welfare gains from introducing fiscal rules. Last, it concludes that, based on experiences in other countries, developing strong institutions and improving public financial management are necessary steps to ease the transitions to a rules-based fiscal policy framework.

Author : William S. Haraf
Publisher : American Enterprise Institute
Page : 230 pages
File Size : 17,5 MB
Release : 1990
Category : Business & Economics
ISBN : 9780844737133

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This volume focuses on the crucial relationships between domestic and international economic developments and on their implications for monetary, fiscal, and exchange rate policies. The volume includes Richard N.Cooper on challenges to the international monetary system, Hali Edison and Michael Melvin on the choice of an exchange rate system, Gottfried Haberler on international and European monetary systems, Alan C.Stockman on exchange rates and the current account, Guido Tabellini on export of an inflation tax; and Thomas D.Willett and Clas Wihlborg on international capital flows and the dollar. It is a companion volume to Monetary Policy for a Changing Financial Environment.

Author : Mr.Jiro Honda
Publisher : International Monetary Fund
Page : 53 pages
File Size : 30,71 MB
Release : 2017-09-12
Category : Business & Economics
ISBN : 1484318889

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Over the past decade, Lesotho and Swaziland have faced significant volatility in their fiscal revenues, owing to highly unstable Southern African Customs Union (SACU) receipts. Based on model analysis, this paper explores the advantages of implementing fiscal rules to deal with such volatility. It finds that the use of a structural balance target could smooth the growth impact from revenue shocks while helping preserve sufficient international reserves during bad times. From a long-term perspective, it suggests possible welfare gains from introducing fiscal rules. Last, it concludes that, based on experiences in other countries, developing strong institutions and improving public financial management are necessary steps to ease the transitions to a rules-based fiscal policy framework.

Author : Francisco Arroyo Marioli
Publisher :
Page : 0 pages
File Size : 34,73 MB
Release : 2023
Category :
ISBN :

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This paper studies the volatility of fiscal policy in a large sample of countries with a focus on emerging markets and developing economies and commodity exporters over 1990-2021. The findings show that fiscal policy has been more volatile in emerging markets and developing economies than in advanced economies, and in commodity exporters relative to non-commodity exporters over this period. The degree of commodity dependence, and institutional and policy variables can explain a large percentage of the cross-country variation in volatility. The existence of fiscal rules, a more liberalized capital account, and more flexible exchange rates are all associated with lower fiscal policy volatility. The paper also shows the negative macroeconomic consequences of this additional volatility on economic growth, finding that, over a 30-year period, it can explain 8 percent of the income gap between the emerging markets and developing economies and advanced economies in the sample.

Author : Guillermo E. Perry
Publisher : World Bank Publications
Page : 354 pages
File Size : 27,56 MB
Release : 2007-10-19
Category : Business & Economics
ISBN : 0821370855

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Fiscal policy in Latin America has been guided primarily by short-term liquidity targets whose observance was taken as the main exponent of fiscal prudence, with attention focused almost exclusively on the levels of public debt and the cash deficit. Very little attention was paid to the effects of fiscal policy on growth and on macroeconomic volatility over the cycle. Important issues such as the composition of public expenditures (and its effects on growth), the ability of fiscal policy to stabilize cyclical fluctuations, and the currency composition of public debt were largely neglected. As a result, fiscal policy has often amplified cyclical volatility and dampened growth. 'Fiscal Policy, Stabilization, and Growth' explores the conduct of fiscal policy in Latin America and its consequences for macroeconomic stability and long-term growth. In particular, the book highlights the procyclical and anti-investment biases embedded in the region's fiscal policies, explores their causes and macroeconomic consequences, and asesses their possible solutions.

Author : Craig Burnside
Publisher : World Bank Publications
Page : 312 pages
File Size : 31,71 MB
Release : 2005
Category : Business & Economics
ISBN : 9780821358740

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Topics discussed in this publication include: an introduction to theoretical and practical aspects of fiscal sustainability; theoretical prerequisites for fiscal sustainability analysis; debt indicators in the measurement of vulnerability; cyclical adjustment of budget surplus; pro-cyclical fiscal policy using Mexico's fiscal accounts as a case study; fiscal rules and the experience of Chile; currency crises and models for deal with financing costs.

Author : M. Ayhan Kose
Publisher : World Bank Publications
Page : 403 pages
File Size : 23,83 MB
Release : 2021-03-03
Category : Business & Economics
ISBN : 1464815453

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The global economy has experienced four waves of rapid debt accumulation over the past 50 years. The first three debt waves ended with financial crises in many emerging market and developing economies. During the current wave, which started in 2010, the increase in debt in these economies has already been larger, faster, and broader-based than in the previous three waves. Current low interest rates mitigate some of the risks associated with high debt. However, emerging market and developing economies are also confronted by weak growth prospects, mounting vulnerabilities, and elevated global risks. A menu of policy options is available to reduce the likelihood that the current debt wave will end in crisis and, if crises do take place, will alleviate their impact.

Author : Juan Carlos Hatchondo
Publisher : International Monetary Fund
Page : 28 pages
File Size : 32,45 MB
Release : 2012-01-01
Category : Business & Economics
ISBN : 1463948875

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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.