The Structural Budget Balance the Imf's Methodology

14 Pages Posted: 15 Feb 2006

See all articles by Robert Hagemann

Robert Hagemann

International Monetary Fund (IMF); National Bureau of Economic Research (NBER)

Date Written: July 1999

Abstract

This paper describes the methodology used by the IMF staff to calculate the structural budget balance, estimates of which are published regularly in the IMF`s World Economic Outlook. The structural budget balance is the government`s actual fiscal position purged of the estimated budgetary consequences of the business cycle, and is designed in part to provide an indication of the medium-term orientation of fiscal policy. Interpretation of the structural budget balance requires caution in several respects, however, some of which are reviewed in the paper. The paper then considers briefly the potential usefulness of the structural budget balance as a tool for enforcement--under the Stability and Growth Pact--of the European Economic and Monetary Union reference value on the deficit specified in the Maastricht Treaty.

Keywords: Budget balance fiscal policy

JEL Classification: E62 H62

Suggested Citation

Hagemann, Robert, The Structural Budget Balance the Imf's Methodology (July 1999). IMF Working Paper No. 99/95, Available at SSRN: https://ssrn.com/abstract=880622

Robert Hagemann (Contact Author)

International Monetary Fund (IMF) ( email )

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National Bureau of Economic Research (NBER)

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