Stock-Flow Adjustments, Government’s Integrated Balance Sheet and Fiscal Transparency

Author/Editor:

Mike Seiferling

Publication Date:

March 7, 2013

Electronic Access:

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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 re-examines the stock-flow discrepancies of government debt and deficits and correlation with fiscal transparency. Applying the fully integrated relationship between financial stocks and flows allows for a more refined analysis of the deterministic components that make up the ‘stock-flow’ residual. Using partial measures of these stock-flow residuals, several empirical studies have found them to be significantly correlated with fiscaltransparency, inflation, fiscal rules, and banking crisis. Using fully integrated public finance data from the IMF Government Finance Statistics Yearbook for a sample of 22 countries, the findings in this paper suggest that stock-flow residuals have a significantly smaller magnitude than previously assumed and are, in fact, not correlated with fiscal transparency. A stronger determinant of fiscal transparency scores appears to be the actual reporting of fiscal data covering general government, especially a full financial balance sheet.

Series:

Working Paper No. 13/63

Subject:

English

Publication Date:

March 7, 2013

ISBN/ISSN:

9781475537642/1018-5941

Stock No:

WPIEA2013063

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

25

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