Targeting the Structural Balance
43 Pages Posted: 25 Apr 2011
Date Written: March 2007
Abstract
This paper discusses whether a country should conduct fiscal policy by targeting a structural (or cyclically adjusted) fiscal balance. The paper is divided into three sections. The first section discusses the concept of cyclically adjusted balance (CAB) and points out practical and conceptual problems related to the interpretation and the measurement of a CAB. The second section discusses the theoretical rationale for having a fiscal rule in general and a rule defined in terms of a cyclically adjusted balance in particular. The third section discusses conceptual and practical problems with adopting fiscal rules and rules that target the structural balance.
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Tax Base Variability and Procyclical Fiscal Policy
By Ernesto Talvi and Carlos A. Vegh
-
Tax Base Variability and Procyclical Fiscal Policy
By Ernesto Talvi and Carlos A. Vegh
-
Procyclical Fiscal Policy in Developing Countries: Truth or Fiction?
By Ethan Ilzetzki and Carlos A. Vegh
-
Procyclical Fiscal Policy: Shocks, Rules, and Institutions - a View from Mars
-
International Evidence on Fiscal Solvency: Is Fiscal Policy "Responsible"?
-
International Evidence on Fiscal Solvency: Is Fiscal Policy Responsible?