Analyzing Fiscal Space Using the MAMS Model: An Application to Burkina Faso

Author/Editor: Gottschalk, Jan ; Manh Le,, Vu ; Lofgren, Hans ; Nouve, Kofi
Publication Date: October 01, 2009
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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 analyses economic implications and the transmission mechanisms of different options for creating and using fiscal space. For creating fiscal space, we consider prioritizing expenditures, raising revenue, and scaled-up aid. Fiscal space is used for increasing health and education spending, infrastructure spending, or both. The analysis takes place within the World Bank's MAMS model, which is a multisectoral real computable general equilibrium model that incorporates the Millennium Development Goals. The model has been calibrated for Burkina Faso, which serves as an illustrative country example. Some of the key results are that absorbing a more educated labor force requires fundamental structural change in the economy; increasing health and education spending can face sizeable capacity constraints; and infrastructure spending has a positive effect on growth as well as education and health outcomes.
Series: Working Paper No. 09/227
Subject(s): Burkina Faso | Capital inflows | Concessional aid | Economic growth | Economic models | Fiscal policy | Fiscal sector | Government expenditures | Human capital | Infrastructure | Millennium Development Goals | Resource mobilization | Revenue mobilization

Author's Keyword(s): Fiscal space | simulation | computable general equilibrium model
Publication Date: October 01, 2009
Format: Paper
Stock No: WPIEA2009227 Pages: 63
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