Brondolo, John, 2009, “Collecting Taxes During an Economic Crisis: Challenges and Policy Options”, IMF Staff Position Note, SPN/09/17, (Washington: International Monetary Fund).
Chalk, Nigel, 2002, “Structural Balances and All That: Which Indicators to Use in Assessing Fiscal Policy,” IMF Working Paper 02/101, (Washington: International Monetary Fund).
Fedelino, Annalisa, and others, 2009, “Computing Cyclically Adjusted Balances and Automatic Stabilizers”, IMF Technical Notes and Manuals, (Washington: International Monetary Fund).
Girouard, Nathalie and Christophe Andre, 2005, “Measuring Cyclically-Adjusted Budget Balances for OECD Countries,” OECD Economics Department Working Paper 434, OECD Publishing.
International Monetary Fund, Fiscal Affairs Department, 2005, “Cyclicality of Fiscal Policy and Cyclically Adjusted Fiscal Balances,” Board Paper (SM/05/393), International Monetary Fund.
Kanda, Daniel, 2010, “Asset Booms and Structural Fiscal Position: The Case of Ireland,” IMF Working Paper 10/57, (Washington: International Monetary Fund).
Sancak, Cemile, and others, 2010, “Tax Revenue Response to the Business Cycle,” IMF Working Paper WP/10/71, (Washington: International Monetary Fund).
Prepared by Izabela Karpowicz (FAD).
While an approximation, these elasticities are close to those estimated for OECD countries. In particular, the OECD (Girouard and André, 2005) elasticities computed for specific tax categories yield an aggregate revenue elasticity close to 1.
During severe crises, problems with tax compliance (Brondolo, 2009) may weaken revenues beyond what suggested by historical trends and collection efforts. Similarly, long-run revenue elasticities do not hold well during output contractions and expansions (Sancak and others, 2010).
Adjustment for interest rate changes is not deemed necessary for BiH given that borrowing is largely long-term and with fixed interest rates.
The discretionary fiscal stance is calculated as the difference in the CABs across years. The effect of automatic stabilizers is calculated as the difference between the change in the overall balance and the discretionary fiscal stance.