The Structural Budget Balance The IMF’s Methodology

July 1, 1999

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Robert P. Hagemann The Structural Budget Balance The IMF’s Methodology, (USA: International Monetary Fund, 1999) accessed September 20, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Expenditure, Fiscal policy, Fiscal stance, Potential output, Production, Total factor productivity

Keywords: Budget balance, Country, Estimation of a production function, Expenditure impact, Fiscal policy, Fiscal stance, IMF stair estimate, Natural rate of unemployment, Other EU country, Potential output, Production function approach, Revenue elasticity, Total factor productivity, WP

Publication Details

Pages:

14
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1999/095
Stock No:

WPIEA0951999
ISBN:

9781451851809
ISSN:

1018-5941

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