Fiscal Sustainability: A 21st Century Guide for the Perplexed
April 22, 2013
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Summary
This paper critically reviews recent work regarding the sustainability of public debt. It argues that Debt Sustainability Analyses (DSAs) should be more than mere mechanical simulation exercises. Instead, a DSA should be linked to some objective regarding the distribution of fiscal burdens and distortions over time (in the tradition of Barro’s 1979 tax smoothing objective). The paper discusses objective functions that yield simple and transparent fiscal policy rules.
Subject: Commodities, Fiscal consolidation, Fiscal policy, Fiscal sustainability, Oil, Public debt
Keywords: debt ratio, debt stabilization, Fiscal consolidation, fiscal rule, Fiscal sustainability, GDP ratio, Global, Intertemporal solvency, market value, nominal interest rate, Oil, present value, primary surplus, public goods, share price, stochastic simulation, structural surplus, surplus goal, surplus process, surplus ratio, surplus ratio-to-output, surplus target, tax smoothing, war chest, WP
Pages:
49
Volume:
2013
DOI:
Issue:
089
Series:
Working Paper No. 2013/089
Stock No:
WPIEA2013089
ISBN:
9781484381991
ISSN:
1018-5941
