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Business and Economics > Public Finance

You are looking at 1 - 7 of 7 items for :

  • Type: Journal Issue x
  • General Aggregative Models: Keynes; Keynesian; Post-Keynesian x
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Cover IMF Working Papers
Back to the Future: Fiscal Rules for Regaining Sustainability
Mr. Serhan Cevik
This paper assesses the cyclicality and sustainability of fiscal policy in Belize and applies a stochastic simulation model to determine the optimal set of fiscal rules. The empirical analysis shows that fiscal policy in Belize has been significantly procyclical and unsustainable much of the period since 1976. While the government’s recent commitment to maintain a primary surplus of at least 2 percent of GDP until 2021 is supporting debt reduction, stochastic simulations indicate that further improvement in the primary balance is necessary to reliably bring the debt-to-GDP ratio to a sustainable path. Given Belize’s history of large economic shocks, this paper proposes explicit fiscal rules designed for countercyclical policy and debt sustainability. It recommends integrating such rules into a well-designed fiscal responsibility law and establishing an independent fiscal council to improve accountability and transparency.
Keywords:
WP; government; debt ratio; budget constraint; cyclically-adjusted government expenditure; Fiscal policy; sustainability; procyclicality; debt; fiscal rules; debt accumulation equation; government's fiscal policy; fiscal policy cyclicality; Fiscal stance; Caribbean
Cover IMF Working Papers
A New Strategy for Korea’s Fiscal Policy in a Low Growth Environment
Ms. Edda Zoli
,
Hou Wang
, and
Mr. Douglas Laxton
Adverse demographics and other structural weaknesses impinge on Korea’s long-term fiscal outlook and potential growth. Moreover, inadequate social protection is creating poverty and dampening consumption. The paper presents projections of Korea’s fiscal outlook, using new estimates of potential growth obtained with a novel multivariate filter. It shows that keeping fiscal revenues-to-GDP constant would result in an explosive public debt dynamic in the long term. Then, through simulations of the Flexible System of Global Models, the paper analyzes policies to preserve fiscal sustainability, while boosting potential growth and social protection. It concludes that with greater revenue mobilization, Korea can stabilize debt-to-GDP well below “dangerous” levels. Policies to address Korea’s challenges include higher targeted transfers to the most vulnerable and fiscal measures to support female labor force participation and employment, accompanied by product and labor market reforms.
Keywords:
WP; GDP; product market; labor market; deficit; aging; long-term fiscal sustainability; structural reforms; potential output; product market distortion; yield productivity gain; production function; GDP ratio; Korea's productivity catch-up; Korea's total factor productivity; product market regulation; Productivity; Global
Cover IMF Working Papers
Australia’s Fiscal Framework: Revisiting Options for a Fiscal Anchor
Allan Dizioli
,
Mr. Philippe D Karam
,
Mr. Dirk V Muir
, and
Siegfried Steinlein
This paper revisits options for fiscal anchors in Australia against the backdrop of a medium-term budget balance anchor that has led to larger than expected upward drift in the net debt to GDP ratio since the end of the mining investment boom. The IMF’s G20MOD model is used to compare the budget balance anchor with a long-term debt anchor. Using model simulations evaluated against objective macro stabilization-debt control criteria under three likely scenarios for the Australian economy, the latter is found to perform at least as well as the former. The paper also considers the operationalization of a long-term debt anchor utilizing a combination of fiscal rules which includes expenditure restrictions and a flexible time horizon for convergence, aiming at encouraging countercyclical fiscal policy and minimizing the cost in terms of real GDP foregone in the medium term under fiscal consolidation.
Keywords:
WP; government; long-term debt; net; debt; Fiscal policy; fiscal rules; general equilibrium models; taxation; commonwealth government; budget constraint; debt target; territory treasury; government's goal; government budget constraint; deficit target; government dissaving; government face; long-term government debt target; debt ratio; Budget planning and preparation; Business cycles; Global
Cover IMF Working Papers
Identical Twins? Destination-Based Cash-Flow Taxes Versus Consumption Taxes with Payroll Subsidies
Benjamin Carton
,
Emilio Fernández Corugedo
, and
Mr. Benjamin L Hunt
The Global Integrated Monetary and Fiscal model (GIMF) is a multi-region, forward-looking, DSGE model developed by the Economic Modeling Division of the IMF for policy analysis and international economic research. This paper uses GIMF to illustrate when a destination-based cash-flow tax is equivalent to a combination of a consumption tax and a labor subsidy, as the latter combination have been advocated as proxies for the implementation of destination-based cash-flow taxes. The paper documents the conditions under which both types of taxes are identical and how the equivalence in terms of the real economy and tax revenue responses can be broken, namely after the introduction of finitely lived consumers that value government debt as net wealth (real economy) and the introduction of untaxed government expenditure (tax revenue).
Keywords:
WP; consumption tax; real interest rate; cash flow; tax revenue; tax policy; business taxation; financial accelerator; dynamic stochastic general equilibrium models; macroeconomic interdependence; government debt; distortionary tax; lump-sum tax; production tax; tax instrument; tax equivalence; component of the cl; lump sum tax; lumpsum tax; real value; DBCFT tax; consumption goods; Consumption taxes; Value-added tax; Personal income tax; Global
Cover IMF Working Papers
Spillovers in the Nordic Countries
Mr. Dirk V Muir
Denmark, Finland, Norway, and Sweden form a tightly integrated region which has strong ties with the euro area as well as some exposure to Russia. Using the IMF’s Global Integrated Monetary and Fiscal model (GIMF), we examine spillovers the region could face, focusing on possible scenarios from the rest of the euro area and Russia, and the fall in global oil prices. We show that the spillovers from these scenarios differ in magnitude and impact, regardless of the high degree of integration among the four Nordic economies. These differences are driven by the fact that Denmark and Finland have no independent monetary policy, and Denmark and Norway are net energy exporters while Finland and Sweden are energy importers. We infer lessons for policy from the outcomes.
Keywords:
WP; real GDP; Finland; price; euro area; euro; Spillovers; monetary policy; fiscal policy; dynamic stochastic general equilibrium models; Nordic countries; area imports; real GDP trough; mainland real GDP; oil price drop; monetary policy response; demand share; Norway's mainland real GDP trough; demand share of the oil price decrease; investment demand; mainland real GDP trough; monetary policy in Denmark; GDP reduction; Energy pricing; Energy prices; Consumption; Oil prices; Sovereign wealth funds; Europe; Global
Cover IMF Working Papers
On the Origins of the Fleming-Mundell Model
Mr. James M. Boughton
Forty years ago, Marcus Fleming and Robert Mundell developed independent models of macroeconomic policy in open economies. Why do we link the two, and why do we call the result the Mundell-Fleming, rather than Fleming-Mundell model?
Keywords:
WP; monetary policy; policy analysis; fiscal policy action; effects of monetary and fiscal policies; models of Fleming; Fleming; Mundell; open-economy macroeconomic models; version of Fleming's paper; effectiveness of fiscal and monetary policies; Conventional peg; Floating exchange rates
Cover IMF Working Papers
Working Paper Summaries (WP/95/1 - WP/95/61)
International Monetary Fund
This compilation of summaries of Working Papers released during January-June 1995 is being issued as a part of the Working Paper series. It is designed to provide the reader with an overview of the research work performed by the staff during the period. Authors of Working Papers are normally staff members of the Fund or consultants, although on occasion outside authors may collaborate with a staff member in writing a paper. The views expressed in the Working Papers or their summaries are, however, those of the authors and should not necessarily be interpreted as representing the views of the Fund. Copies of individual Working Papers and information on subscriptions to the annual series of Working Papers may be obtained from IMF Publication Services, International Monetary Fund, 700 19th Street, Washington, D.C. 20431. Telephone: (202) 623-7430 Telefax: (202) 623-7201.
Keywords:
WP; country; rate; economy; liberalization; policy; employment voucher; price liberalization; U.K. economy; transition economy; sound fiscal policy response; Exchange rates; Inflation; Currencies; Real exchange rates; Wages; Sub-Saharan Africa; Baltics; Central and Eastern Europe; Southern Africa; West Africa