## wpiea2019242-print-pdf - Section VII concludes with a summary of reform recommendations

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---

### Data and methodology
- Dataset: annual observations covering the central government from Ministry of Finance, World Bank WDI, and IMF WEO.
- Potential GDP estimation:
  - Method: Hodrick-Prescott (HP) filter.
  - Result: potential growth rate is currently at 2 percent.
  - HP smoothing parameter on annual data: 6.25.
- Cyclical adjustment approach:
  - Follows Hagemann (1999) and Fedelino, Ivanova, and Horton (2009).
  - Aggregate elasticities used: revenue elasticity = 1; expenditure elasticity = 0.
  - Cyclically-adjusted primary balance (CAPB) excludes interest payments (Ip) and interest receipts (Ir) and foreign grants (G) in the specified CAPB formula.
- Stochastic simulation methodology:
  - Uses multivariate normal distribution x ~ N_k(μ, Σ) estimated from annual data 1976–2018.
  - Simulations generate macroeconomic paths to produce debt trajectories (Baum et al. (2018) methodology as applied by Cevik (2019)).
  - Fan charts capture the 5th to 95th percentile of the distribution.

### Estimating cyclically-adjusted balances and fiscal cyclicality
- CAB/CAPB computed as share of potential GDP using cyclically-adjusted tax revenues, cyclically-adjusted expenditures, and non-tax revenues.
- Fiscal impulse measured as the change in the CAPB scaled by potential GDP.
- Findings:
  - Fiscal stance measured by change in CAPB appears to be highly procyclical.
  - Procyclicality implies significant fiscal impulse during periods of strong growth and the opposite during weak performance, exacerbating business cycle fluctuations and undermining public finances over time.

### Testing fiscal sustainability (Fiscal Reaction Function)
- Model specification: CAPB_t = α Debt_{t-1} + β OG_t + ε_t, where OG_t is the output gap; α>0 indicates sustainability.
- Empirical estimates (Table 1):
  - Debt (t-1): Coefficient = -0.06***; Standard Error = 0.02; t-Statistic = -3.07; P-value = 0.00.
  - Output gap: Coefficient = -0.88***; Standard Error = 0.22; t-Statistic = -4.10; P-value = 0.00.
  - Constant: -2.18; Standard Error = 1.38; t-Statistic = -1.57; P-value = 0.12.
  - R-Squared = 0.39; Adjusted R-Squared = 0.35.
  - Note: *** denotes significance at the 1 percent level.
- Interpretation:
  - Negative and statistically significant output gap coefficient indicates highly procyclical discretionary fiscal policy (1976–2018).
  - Negative and significant lagged debt coefficient implies no positive CAPB response to higher debt; necessary condition for fiscal sustainability was not met during the sample period.
  - There has been a significant shift in fiscal effort since 2016, with a larger (in absolute value) coefficient on debt when model estimated up to 2016.

### International experience with fiscal rules and institutional features
- Global trends:
  - More than 90 countries use numerical fiscal rules (up from five in 1990).
  - FRLs combine numerical rules and procedural rules to anchor policy, contain overspending, and ensure debt sustainability.
- Properties of rule types:
  - Debt rules: safeguard solvency but weak operational/calibration and limited countercyclical properties.
  - Budget balance rules: easy to monitor; nominal rules can be procyclical; structural balance rules (e.g., CAPB) allow stabilizers but are hard to estimate/communicate.
  - Expenditure rules: operationally simple, provide guidance, can support stabilization but require reliable medium-term framework.
  - Revenue rules: no direct link to debt sustainability; can be procyclical absent accompanying expenditure or deficit rules.
- Design considerations:
  - Combination of rules is common (~80 percent of rule adopters use two or more rules).
  - Comprehensive coverage needed to include subnational entities, extra-budgetary funds, SOEs, and public investment to avoid off-budget erosion.
  - Escape clauses: limited number of exceptional circumstances, clear interpretation, and unambiguous transition path.
  - Enforcement/autocorrection mechanisms are critical; rules without enforcement yield worse fiscal outcomes.

### Calibrating fiscal rules for Belize: simulations and targets
- Maximum debt limit and debt anchor:
  - “Maximum debt limit” assumed: 60 percent of GDP.
  - Stochastic simulations indicate optimal debt anchor (debt target) for central government: 55 percent of GDP.
  - Safety margin: 5 percent of GDP (difference between 60 percent and 55 percent).
  - Safety margin implication: ensures “maximum debt limit” not breached with a probability of 95 percent over the forecast horizon.
- Scenario simulations (6-year horizon examples):
  - Primary surplus = 2 percent of GDP:
    - Maintaining a primary surplus of 2 percent of GDP would justify a debt anchor of 56 percent of GDP once debt moves below 60 percent of GDP.
    - Not adequate to bring debt-to-GDP in line with government’s goal of 80 percent in five years.
  - Primary surplus = 4 percent of GDP:
    - The debt anchor that keeps debt below 60 percent is estimated to be 58 percent of GDP.
- Debt-reduction strategies (10-year illustrative paths with preferred primary surplus target of 4 percent of GDP):
  - Convergence in the long run: constant primary balance yielding slow debt reduction (about 2 percentage points of GDP over next 10 years).
  - Initial transition period:
    - Gradual improvement during a 4-year transition then constant adjustment thereafter.
    - Required average primary surplus: 3.3 percent of GDP in first 4 years and 4.6 percent of GDP in following 6 years.
  - Front-loading the adjustment (preferred):
    - Instantaneous improvement to build buffers.
    - Required average primary surplus: 4 percent of GDP over a 10-year period.
- Alternative longer horizon:
  - Primary surplus target of 3 percent of GDP a year over the next 15 years could be considered.
  - Front-loaded adjustment equivalent: average primary surplus of 3 percent of GDP in first 9 years followed by loosening to 1.7 percent of GDP in next 6 years.
- Expenditure rule calibration:
  - Formula linking primary balance target and expenditure: e* = r* - pb*, implying Δe* = Δr* - Δpb*.
  - If Δr* = 0 and pb = pb*, spending should grow at same speed as nominal GDP or remain constant as share of GDP.
  - Recommended rule: link annual growth rate of total government spending to potential nominal GDP growth (potential GDP may be estimated as 10-year average given estimation uncertainty).
  - In high-debt contexts, expenditure growth may need to remain below potential GDP until debt target reached.

### Conclusions and reform recommendations
- Key diagnostic conclusion:
  - Belize’s fiscal policy was highly procyclical and did not meet the necessary condition for fiscal sustainability on average during 1976–2018, although major fiscal adjustment has occurred since 2016.
- Recommended combination of fiscal rules (based on stochastic simulations):
  - Under a “maximum debt limit” of 60 percent of GDP, adopt a debt target of 55 percent of GDP to keep debt below the maximum limit with high probability under negative shocks.
  - Maintain a primary surplus target of 4 percent of GDP a year over the next 10 years (or 3 percent of GDP a year over the next 15 years), and a debt-stabilizing primary balance once debt converges to the debt anchor.
  - Introduce an expenditure rule linked to long-run nominal GDP growth to provide additional stabilization properties and reduce procyclicality.
- Institutional and procedural recommendations:
  - Fiscal rules should include clearly-defined escape clauses that allow temporary deviations only for:
    - (i) a limited number of exceptional and unforeseeable events such as natural disasters and severe financial crises and economic recessions;
    - (ii) well-specified guidelines on interpretation/determination of such events and triggered only with parliamentary approval;
    - (iii) an unambiguous transition path to compliance with the fiscal rules and the interim regime.
  - FRL should establish an automatic correction mechanism triggered by pre-specified deviations and require additional fiscal adjustment in subsequent years.
  - Enforcement sanctions (e.g., public report to parliament) and a timetable to offset deviations should be specified.
  - Establishment of an independent fiscal council is recommended to provide unbiased macro-fiscal projections, evaluate compliance with fiscal rules, enhance transparency and accountability, and buttress credibility.

*Source: wpiea2019242-print-pdf - Section VII concludes with a summary of reform recommendations.*

### References .............................................................................................................

### I. INTRODUCTION

### Fiscal history and past restructurings
- Public debt rose from 52 percent in 1999 to a peak of 109 percent in 2003.
- External debt restructurings occurred in 2007, 2013, and 2017.
- After the 2017 restructuring, the government committed to tighten the fiscal stance by 3 percentage points of GDP in FY2017/18, and to maintain a primary surplus of 2 percent of GDP for the subsequent three years until 2021.
- Asonuma and others (2018) provide a detailed overview of Belize’s 2016–17 sovereign debt restructuring.

### Recent fiscal adjustment and remaining vulnerabilities
- A fiscal adjustment amounting to 4 percent of GDP was delivered over the past two years.
- Despite adjustment, the debt ratio remains about 94 percent of GDP.
- Belize is highlighted as especially vulnerable to natural disasters and risks of climate change.

### Debt reduction objectives and rationale for fiscal rules
- Belize aims to reduce public debt to 80 percent of GDP within the next five years, and to 60 percent over the longer term.
- International experience indicates that explicit fiscal rules can:
  - avoid procyclical behavior,
  - build sufficient fiscal buffers,
  - make fiscal policy accountable, transparent, and predictable,
  - keep the cost of borrowing low,
  - ensure debt sustainability.
- Evidence cited: countries with well-designed and binding fiscal rules tend to have stronger fiscal performance and better access to funding (Debrun and others, 2008; Schaechter and others, 2012; IMF, 2013).
- Examples of Caribbean countries using rule-based approaches: The Bahamas, Grenada, and Jamaica.

### Fiscal sustainability assessment approach and main finding
- The paper assesses cyclicality and sustainability of fiscal policy for Belize over 1976 to 2018.
- Methodology:
  - Uses the model-based approach proposed by Bohn (1998): checks whether the primary balance responds to fluctuations in the debt ratio.
  - Decomposes the primary balance into cyclical and structural components.
  - Attributes changes in the structural primary balance to discretionary policy changes; the variation unexplained by the business cycle traces discretionary fiscal policy.
- Main empirical finding:
  - Discretionary fiscal policy in Belize was highly procyclical and failed to meet the necessary condition of fiscal sustainability, on average, during 1976–2018.
  - There has been a major fiscal adjustment since 2016, but the historical record contrasts with empirical evidence from the rest of the Caribbean where fiscal policy tends to be countercyclical and account for sustainability considerations over the past four decades.

### Purpose of the paper and next steps
- The paper investigates which fiscal rules and institutional reforms could support Belize’s fiscal reform and debt reduction process.
- It considers the role of a fiscal responsibility law (FRL) that enshrines fiscal rules designed for countercyclical policy and debt sustainability.
- The government’s commitment to maintain a primary surplus of at least 2 percent of GDP until 2021 is helpful but not sufficient to ensure the intertemporal budget constraint or provide appropriate guidance over the economic cycle.
- The paper calibrates a combination of fiscal rules for Belize to anchor debt sustainability and formulate countercyclical fiscal policy.

### Structure of the paper (sections)
- Section II: estimation of cyclically adjusted fiscal balances.
- Section III: model-based fiscal sustainability test.
- Section IV: overview of international experience with fiscal rules.
- Section V: advantages of independent fiscal councils.
- Section VI: methodology for calibrating fiscal rules and stochastic simulation exercise for Belize.

*Source: wpiea2019242-print-pdf.*

### Section VII concludes with a summary of reform recommendations.

### wpiea2019242-print-pdf - Section VII concludes with a summary of reform recommendations

### Data and methodology
- Dataset: annual observations covering the central government from Ministry of Finance, World Bank WDI, and IMF WEO.
- Potential GDP estimation:
  - Method: Hodrick-Prescott (HP) filter.
  - Result: potential growth rate is currently at 2 percent.
  - HP smoothing parameter on annual data: 6.25.
- Cyclical adjustment approach:
  - Follows Hagemann (1999) and Fedelino, Ivanova, and Horton (2009).
  - Aggregate elasticities used: revenue elasticity = 1; expenditure elasticity = 0.
  - Cyclically-adjusted primary balance (CAPB) excludes interest payments (Ip) and interest receipts (Ir) and foreign grants (G) in the specified CAPB formula.
- Stochastic simulation methodology:
  - Uses multivariate normal distribution x ~ N_k(μ, Σ) estimated from annual data 1976–2018.
  - Simulations generate macroeconomic paths to produce debt trajectories (Baum et al. (2018) methodology as applied by Cevik (2019)).
  - Fan charts capture the 5th to 95th percentile of the distribution.

### Estimating cyclically-adjusted balances and fiscal cyclicality
- Key procedural points:
  - CAB/CAPB computed as share of potential GDP using cyclically-adjusted tax revenues, cyclical-adjusted expenditures, and non-tax revenues.
  - Fiscal impulse measured as the change in the CAPB scaled by potential GDP.
- Findings on fiscal cyclicality in Belize:
  - Fiscal stance measured by change in CAPB appears to be highly procyclical.
  - Procyclicality implies significant fiscal impulse during periods of strong growth and the opposite during weak performance, exacerbating business cycle fluctuations and undermining public finances over time.

### Testing fiscal sustainability (Fiscal Reaction Function)
- Model: CAPB_t = α Debt_{t-1} + β OG_t + ε_t, where OG_t is the output gap; α>0 indicates sustainability.
- Empirical estimates (Table 1):
  - Debt (t-1): Coefficient = -0.06***; Standard Error = 0.02; t-Statistic = -3.07; P-value = 0.00.
  - Output gap: Coefficient = -0.88***; Standard Error = 0.22; t-Statistic = -4.10; P-value = 0.00.
  - Constant: -2.18; Standard Error = 1.38; t-Statistic = -1.57; P-value = 0.12.
  - R-Squared = 0.39; Adjusted R-Squared = 0.35.
  - Note: *** denotes significance at the 1 percent level.
- Interpretation:
  - Negative and statistically significant output gap coefficient indicates highly procyclical discretionary fiscal policy (1976–2018).
  - Negative and significant lagged debt coefficient implies no positive CAPB response to higher debt; necessary condition for fiscal sustainability was not met during the sample period.
  - There has been a significant shift in fiscal effort since 2016, with a larger (in absolute value) coefficient on debt when model estimated up to 2016.

### International experience with fiscal rules and institutional features
- Global trends:
  - More than 90 countries use numerical fiscal rules (up from five in 1990).
  - FRLs combine numerical rules and procedural rules to anchor policy, contain overspending, and ensure debt sustainability.
- Properties of rule types (qualitative):
  - Debt rules: safeguard solvency but weak operational/calibration and limited countercyclical properties.
  - Budget balance rules: easy to monitor; nominal rules can be procyclical; structural balance rules (e.g., CAPB) allow stabilizers but are hard to estimate/communicate.
  - Expenditure rules: operationally simple, provide guidance, can support stabilization but require reliable medium-term framework.
  - Revenue rules: no direct link to debt sustainability; can be procyclical absent accompanying expenditure or deficit rules.
- Design considerations:
  - Combination of rules is common (~80 percent of rule adopters use two or more rules).
  - Comprehensive coverage needed to include subnational entities, extra-budgetary funds, SOEs, and public investment to avoid off-budget erosion.
  - Escape clauses: limited number of exceptional circumstances, clear interpretation, and unambiguous transition path.
  - Enforcement/autocorrection mechanisms are critical; rules without enforcement yield worse fiscal outcomes.

### Calibrating fiscal rules for Belize: simulations and targets
- Maximum debt limit and debt anchor:
  - “Maximum debt limit” assumed: 60 percent of GDP.
  - Stochastic simulations indicate optimal debt anchor (debt target) for central government: 55 percent of GDP.
  - Safety margin: 5 percent of GDP (difference between 60 percent and 55 percent).
  - Safety margin implication: ensures “maximum debt limit” not breached with a probability of 95 percent over the forecast horizon.
- Scenario simulations (6-year horizon examples):
  - Primary surplus = 2 percent of GDP:
    - Under this scenario, maintaining a primary surplus of 2 percent of GDP would justify a debt anchor of 56 percent of GDP once debt moves below 60 percent of GDP.
    - Not adequate to bring debt-to-GDP in line with government’s goal of 80 percent in five years.
  - Primary surplus = 4 percent of GDP:
    - Under this scenario, the debt anchor that keeps debt below 60 percent is estimated to be 58 percent of GDP.
- Debt-reduction strategies (10-year illustrative paths with preferred primary surplus target of 4 percent of GDP):
  - Convergence in the long run: constant primary balance yielding slow debt reduction (about 2 percentage points of GDP over next 10 years).
  - Initial transition period:
    - Gradual improvement during a 4-year transition then constant adjustment thereafter.
    - Required average primary surplus: 3.3 percent of GDP in first 4 years and 4.6 percent of GDP in following 6 years.
  - Front-loading the adjustment (preferred):
    - Instantaneous improvement to build buffers.
    - Required average primary surplus: 4 percent of GDP over a 10-year period.
- Alternative longer horizon:
  - Primary surplus target of 3 percent of GDP a year over the next 15 years could be considered.
  - Front-loaded adjustment equivalent: average primary surplus of 3 percent of GDP in first 9 years followed by loosening to 1.7 percent of GDP in next 6 years.
- Expenditure rule calibration:
  - Formula linking primary balance target and expenditure:
    - e* = r* - pb*, implying Δe* = Δr* - Δpb*.
    - If Δr* = 0 and pb = pb*, spending should grow at same speed as nominal GDP or remain constant as share of GDP.
  - Recommended rule: link annual growth rate of total government spending to potential nominal GDP growth (potential GDP may be estimated as 10-year average given estimation uncertainty).
  - In high-debt contexts, expenditure growth may need to remain below potential GDP until debt target reached.

### Conclusions and reform recommendations (Section VII summary)
- Key diagnostic conclusion:
  - Belize’s fiscal policy was highly procyclical and did not meet the necessary condition for fiscal sustainability on average during 1976–2018, although major fiscal adjustment has occurred since 2016.
- Recommended combination of fiscal rules (based on stochastic simulations):
  - Under a “maximum debt limit” of 60 percent of GDP, adopt a debt target of 55 percent of GDP to keep debt below the maximum limit with high probability under negative shocks.
  - Maintain a primary surplus target of 4 percent of GDP a year over the next 10 years (or 3 percent of GDP a year over the next 15 years), and a debt-stabilizing primary balance once debt converges to the debt anchor.
  - Introduce an expenditure rule linked to long-run nominal GDP growth to provide additional stabilization properties and reduce procyclicality.
- Institutional and procedural recommendations:
  - Fiscal rules should include clearly-defined escape clauses that allow temporary deviations only for:
    - (i) a limited number of exceptional and unforeseeable events such as natural disasters and severe financial crises and economic recessions;
    - (ii) well-specified guidelines on interpretation/determination of such events and triggered only with parliamentary approval;
    - (iii) an unambiguous transition path to compliance with the fiscal rules and the interim regime.
  - FRL should establish an automatic correction mechanism triggered by pre-specified deviations and require additional fiscal adjustment in subsequent years.
  - Enforcement sanctions (e.g., public report to parliament) and a timetable to offset deviations should be specified.
  - Establishment of an independent fiscal council is recommended to provide unbiased macro-fiscal projections, evaluate compliance with fiscal rules, enhance transparency and accountability, and buttress credibility.

*Source: wpiea2019242-print-pdf - Section VII concludes with a summary of reform recommendations.*

### REFERENCES

### REFERENCES

### Fiscal rules, fiscal councils, and fiscal credibility
- Baum, A., A. Hodge, L. Eyraud, M. Jarmuzek, Y. Kim, S. Mbaye, and E. Ture, 2018, “How to Calibrate Fiscal Rules—A Primer,” IMF How-to-Note (Washington, DC: International Monetary Fund).  
- Budina, N., T. Kinda, A. Schaechter, and A. Weber, 2012, “Fiscal Rules at a Glance: Country Details from a New Dataset,” IMF Working Paper No. 12/273 (Washington, DC: International Monetary Fund).  
- Debrun, X., L. Moulin, A. Turrini, J. Ayuso-i-Casals, and M. Kumar, 2008, “Tied to the Mast? National Fiscal Rules in the European Union,” Economic Policy, Vol. 23, pp. 299–362.  
- Debrun, X., D. Hauner, and M. Kumar, 2009, “Independent Fiscal Agencies,” Journal of Economic Surveys, Vol. 23, pp. 44–81.  
- Debrun, X., and T. Kinda, 2014, “Strengthening Post-Crisis Fiscal Credibility: Fiscal Councils on the Rise—A New Dataset,” IMF Working Paper No. 14/58 (Washington, DC: International Monetary Fund).  
- Hageman, R., 2011, “How Can Fiscal Councils Strengthen Fiscal Performance?” OECD Journal: Economic Studies, Vol. 1, pp. 75–98.  
- International Monetary Fund, 2009, “Fiscal Rules—Anchoring Expectations for Sustainable Public Finances,” IMF Policy Paper prepared by the Fiscal Affairs Department (Washington, DC: International Monetary Fund).  
- International Monetary Fund, 2013, “The Functions and Impact of Fiscal Councils,” IMF Policy Paper prepared by the Fiscal Affairs Department (Washington, DC: International Monetary Fund).  
- Koptis, G., and S. Symansky, 1998, “Fiscal Policy Rules,” IMF Occasional Paper No. 162 (Washington, DC: International Monetary Fund).  
- Schaechter, A., T. Kinda, Budina, N., and A. Weber, 2012, “Fiscal Rules in Response to the Crisis—Toward the “Next-Generation Rules. A New Dataset,” IMF Working Paper No. 12/187 (Washington, DC: International Monetary Fund).  

### Fiscal policy behavior, procyclicality, and automatic stabilizers
- Alesina, A., F. Campante, and G. Tabellini, 2008, “Why is Fiscal Policy Often Procyclical?” Journal of the European Economic Association, Vol. 6, pp. 1006–1036.  
- Gavin, M., and R. Perotti, 1997, “Fiscal Policy in Latin America,” in NBER Macroeconomics Annual 1997 (Cambridge, MA: MIT Press).  
- Talvi, E., and C. Vegh, 2005, “Tax Base Variability and Procyclicality of Fiscal Policy,” Journal of Development Economics, Vol. 78, pp. 156–190.  
- Cevik, S., 2019, “Anchor Me: The Benefits and Challenges of Fiscal Responsibility,” Asian-Pacific Economic Literature, Vol. 33, pp. 33–47.  
- Cevik, S., and K. Teksoz, 2014, “Deep Roots of Fiscal Behavior,” Journal of Banking and Financial Economics, Vol. 2, pp. 5–33.  
- Fedelino, A., A. Ivanova and M. Horton, 2009, “Computing Cyclically Adjusted Balances and Automatic Stabilizers,” IMF Technical Notes and Manuals No. 09/05 (Washington: International Monetary Fund).  
- Cevik, S., and V. Nanda, 2019, “Riding the Storm: Fiscal Sustainability in the Caribbean,” IMF Working Paper No. 19/ (Washington, DC: International Monetary Fund).  

### Public debt, debt policy, and growth interactions
- Bohn, H., 1998, “The Behavior of U.S. Public Debt and Deficits,” Quarterly Journal of Economics, Vol. 113, pp. 949–963.  
- Eberhardt, M., and A. Presbitero, 2015, “Public Debt and Growth: Heterogeneity and Non-Linearity,” Journal of International Economics, Vol. 97, pp. 45–58.  
- Checherita-Westphal, C., A. Hallett, and P. Rother, 2014, “Fiscal Sustainability Using Growth Maximizing Debt Targets,” Applied Economics, Vol. 46, pp. 638-647.  
- Escolano, J., and V. Gaspar, 2016, “Optimal Debt Policy Under Asymmetric Risk,” IMF Working Paper No. 16/178 (Washington, DC: International Monetary Fund).  
- Ostry, J., A. Ghosh, J. Kim, and M. Qureshi, 2010, “Fiscal Space,” IMF Staff Discussion Note No. SPN/10/11 (Washington, DC: International Monetary Fund).  
- Asonuma, T., M. Papaioannou, E. Togo, and B. van Selm, 2018, “Belize’s 2016–17 Sovereign Debt Restructuring– Third Time Lucky?” IMF Working Paper No. 18/121 (Washington, DC: International Monetary Fund).  

### Public investment, potential output, and measurement methods
- Blagrave, P., R. Garcia-Saltos, D. Laxton, and F. Zhang, 2015, “A Simple Multivariate Filter for Estimating Potential Output,” IMF Working Paper No. 15/79 (Washington, DC: International Monetary Fund).  
- Fournier, J., 2016, “The Positive Effect of Public Investment on Potential Growth,” OECD Economics Department Working Papers No. 1347 (Paris: Organization for Economic Cooperation and Development).  
- International Monetary Fund, 2014, “Is It Time for an Infrastructure Push? The Macroeconomic Effects of Public Investment,” IMF World Economic Outlook (Washington, DC: International Monetary Fund).  
- Hageman, R., 1999, “The Structural Fiscal Balance: The IMF Method,” IMF Working Paper No. 99/95 (Washington: International Monetary Fund).  
- Hodrick, R., and E. Prescott, 1997, “Post-War Business Cycles: An Empirical Investigation,” Journal of Money, Credit, and Banking, Vol. 29, pp. 1–16.  
- Blagrave, P., R. Garcia-Saltos, D. Laxton, and F. Zhang, 2015, “A Simple Multivariate Filter for Estimating Potential Output,” IMF Working Paper No. 15/79 (Washington, DC: International Monetary Fund).  

### Datasets, measurement, and empirical fiscal analysis
- David, A., and D. Leigh, 2018, “A New Action-Based Dataset of Fiscal Consolidation in Latin America and the Caribbean,” IMF Working Paper No. 18/94 (Washington, DC: International Monetary Fund).  
- Escolano, J., L. Jaramillo, C. Mulas-Granados, and G. Terrier, 2014, “How Much is A Lot? Historical Evidence on the Size of Fiscal Adjustments,” IMF Working Paper No. 14/179 (Washington, DC: International Monetary Fund).  
- Price, R., T. Dang, and Y. Guillemette, 2014, “New Tax and Expenditure Elasticity Estimates for EU Budget Surveillance,” OECD Economics Department Working Papers No. 1174 (Paris: Organization for Economic Cooperation and Development).  
- Budina, N., T. Kinda, A. Schaechter, and A. Weber, 2012, “Fiscal Rules at a Glance: Country Details from a New Dataset,” IMF Working Paper No. 12/273 (Washington, DC: International Monetary Fund).  
- Debrun, X., and T. Kinda, 2014, “Strengthening Post-Crisis Fiscal Credibility: Fiscal Councils on the Rise—A New Dataset,” IMF Working Paper No. 14/58 (Washington, DC: International Monetary Fund).  

### Fiscal risk, calibration, and best practices
- International Monetary Fund, 2016, “Analyzing and Managing Fiscal Risks—Best Practices,” IMF Policy Paper prepared by the Fiscal Affairs Department (Washington, DC: International Monetary Fund).  
- Baum, A., A. Hodge, L. Eyraud, M. Jarmuzek, Y. Kim, S. Mbaye, and E. Ture, 2018, “How to Calibrate Fiscal Rules—A Primer,” IMF How-to-Note (Washington, DC: International Monetary Fund).  
- Cordes, T., T. Kinda, P. Muthoora, and A. Weber, 2015, “Expenditure Rules: Effective Tools for Sound Fiscal Policy?” IMF Working Paper No. 15/29 (Washington, DC: International Monetary Fund).  

*Source: REFERENCES (content unit: wpiea2019242-print-pdf - REFERENCES)*

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_Source: https://www.imf.org/-/media/files/publications/wp/2019/wpiea2019242-print-pdf.pdf_