Asset Booms and Structural Fiscal Positions: The Case of Ireland

24 Pages Posted: 15 Mar 2010

See all articles by Daniel Kanda

Daniel Kanda

International Monetary Fund (IMF)

Date Written: March 2010

Abstract

Asset booms and sectoral changes can distort traditional estimates of structural fiscal revenue, and could lead to serious fiscal policy errors. This paper extends the estimation of structural revenues to take account of asset prices and sectoral changes, and applies this to the case of Ireland, where a property bust has revealed a large hole in the public finances. It is shown that excluding these factors led to a substantial bias in the estimation of structural revenues, and the structural balance prior to the crisis was much larger than earlier estimated.

Keywords: Asset prices, Business cycles, Economic growth, Economic models, Fiscal analysis, Fiscal policy, Government expenditures, Housing prices, Ireland, National income, Revenues, Taxes

Suggested Citation

Kanda, Daniel, Asset Booms and Structural Fiscal Positions: The Case of Ireland (March 2010). IMF Working Paper No. 10/57, Available at SSRN: https://ssrn.com/abstract=1569954

Daniel Kanda (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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