How Cyclical is the Psbr?
Bank of England Working Paper No. 34
Posted: 6 Nov 2003
This paper examines the methodology of cyclical adjustment of fiscal balances. The crucial assumption underlying any estimates of the cyclically-adjusted balance (CAB) is found to be the measure of the output gap. Estimates for the UK are presented, suggesting that when the economy returns to trend the PSBR should fall by between 3% to 4.5% of GDP from its position at the end of 1992.
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