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### I. INTRODUCTION — purpose and rationale
- Maintaining a sound fiscal position is challenged by:
  - coordinating and prioritizing many resource bids;
  - difficulties in assessing the full economic effect of tax and expenditure policies;
  - limited time-horizon in decision making.
- Fiscal deterioration has occurred across regions, income levels, and ideologies, suggesting general forces undermining fiscal sustainability.
- Fiscal rules (formalized numerical restrictions on aggregate fiscal parameters) can:
  - foster fiscal discipline by simplifying decision making;
  - promote interest in sustainability issues;
  - reduce scope for time-inconsistent decisions.
- Expenditure ceilings are an overall restriction on the outcome of all or most government expenditure, established well in advance of budget preparation, and often serve as the anchor for a medium-term framework.
- Six key characteristics of expenditure ceilings discussed:
  1. Comprehensiveness (which expenditure categories are included).
  2. Inflation correction and its practical obstacles.
  3. Formulation options for multi-annual ceilings.
  4. Principles for determining ceiling level and explicitness of link with other fiscal objectives.
  5. Options for managing unexpected events (flexibility mechanisms).
  6. Status of the ceiling along a continuum from unilateral government commitment to standing legislation.

### II. EXPENDITURE CEILINGS — why they can work
- Purpose: government announces a maximum level of expenditure and commits not to exceed it to neutralize forces undermining fiscal sustainability.
- Key rationales:
  - Annual fiscal outcomes are heavily affected by revenue fluctuations; adjusting taxes quickly is often impractical given automatic stabilizers and tax-smoothing concerns.
  - Main origin of fiscal indiscipline is excessive accommodation of expenditure increases rather than tax cuts—making a binding restriction on total expenditure useful.
  - Formulating ceilings on ex post outcomes combats incentives to underestimate policy costs (fiscal illusion).
  - Ceilings are operationally feasible compared with balance or debt rules.
- Preconditions for success:
  - political understanding and commitment; rules perceived as too restrictive are unlikely to survive.

### Comprehensiveness — scope and trade-offs
- Effectiveness depends on which items are restricted; principle favors explicit completeness with motivated, unambiguous exceptions.
- Forecasting difficulties complicate comprehensiveness but do not justify exclusions per se.
- Relevant distinctions:
  - items subject to expansionary pressure should be included;
  - rare cases where government only intermediates non-distortionary revenue may justify exclusion.
- Entitlements and interest payments:
  - classification into mandatory vs. non-mandatory is time-horizon dependent; over 10–15 years virtually all items can be changed.
  - including entitlements under medium-term ceilings encourages early political response and integration into budget prioritization.
  - interest payments often excluded because short-term volatility is weakly related to sustainability; Netherlands included interest payments until 2007, but none of Finland, the Netherlands, and Sweden currently include interest payments under their ceilings.

### Cyclically sensitive items — inclusion vs. stabilization
- Trade-off: allowing countercyclical expenditure vs. preserving long-term sustainability.
- Examples:
  - Netherlands and Sweden place all entitlements (including unemployment benefits) under the ceiling.
  - Finland excludes the majority of cyclically sensitive items from its ceiling.
- Practical difficulties:
  - cyclically adjusted ceilings require accurate output gap assessment and elasticities—challenging for medium-term ceilings.
  - classifying expenditure into structural vs. cyclical reduces transparency and invites manipulation.
- OECD estimate cited: approximately ¾ of automatic stabilization is on the revenue side and ¼ on the expenditure side on average; new EU members average ⅞ on revenue side.

### Non-distortionary earmarked revenue — rationale for exclusion
- Where expenditure is directly linked to non-distortionary revenue (EU payments, foreign grants, user fees with full cost recovery), exclusion can be justified since there is no impact on tax wedge or government balance.
- Country treatments differ:
  - Finland: principle of not including circular intermediary expenditure.
  - Netherlands: ceiling defined in net terms—offsets certain expenditure by revenue.
  - Sweden: principle of gross treatment with exceptions.
- Practical concerns: national co-financing of EU programs, administrative financing, and implementation delays can affect annual profiles.

### Investment expenditure — risks and mitigations
- Risk that multi-year aggregate restrictions could distort public investment.
- Common practice: treat investment partly separately; none of the three countries completely exclude investment.
- Issues:
  - governments may cut investments when total expenditure growth exceeds projections;
  - indivisibility and timing uncertainty of investment payments (cash basis) create year-to-year volatility.
- Sale of assets to reduce debt service could be induced by including interest payments in ceilings—potentially undesirable.

### Inflation adjustments — real vs. nominal ceilings
- Finland and the Netherlands: four-year ceilings determined in real terms and converted to nominal terms before annual budget preparation.
- Sweden: three-year ceilings set in nominal terms.
- Advantages of real ceilings: room under the ceiling unaffected by errors in medium-term inflation forecasting; avoids inflation surprises expanding or squeezing real room.
- Translation issues:
  - converting real ceilings to nominal figures introduces ambiguity and opportunities to revise deflators.
  - choice of deflator matters; government-expenditure-based deflator reduces mismatch but can reduce transparency.
- Nominal ceilings can introduce countercyclical effects via inflation changes influencing nominal expenditure room.

### Flexibility mechanisms — managing expenditure fluctuation
- Objective: restrict structural rather than actual expenditure while allowing justified temporary variation.
- Options and practices:
  - contingency margins (planned expenditure set below ceiling) to absorb unforeseen increases;
  - limited carry-overs and technical offsets; excessive flexibility risks eroding discipline.
- Need for larger contingency margins with longer horizons and nominal/less comprehensive ceilings.
- Possible approaches to avoid permanent margins: diminish margin over time or allow use as planning margin for reforms.

### Time horizon — fixed multi-year vs. rolling ceilings
- Two models:
  - fixed-term multi-year ceilings (Finland, the Netherlands — four years).
  - rolling ceilings (Sweden — add a new annual ceiling each year, yielding binding ceilings for three years).
- Trade-offs:
  - fixed multi-year ceilings provide policy envelope for a government’s term and avoid intra-government annual disputes.
  - rolling ceilings allow more medium-term discretion but can bind incoming governments to prior choices.
- Minimum procedural requirement: decision on the ceiling must be made before budget negotiations.

### Numerical definition — formulation options and link to fiscal targets
- Possible formulations:
  - ceilings linked to revenue and targeted fiscal balance (explicit algebraic forms presented in the source).
  - ceilings expressed as a constant ratio to GDP: POT_{t+n} = β_{t+n} × GDP_{t+n}.
  - ceilings as a constant rate of expenditure growth: φ = Ė̂.
- Explicitly linking ceilings to revenue, potential GDP, or balance targets reduces discretion but may be politically unacceptable and subject to forecast bias.

### Legislative status — political commitment vs. legal entrenchment
- Legislative enshrinement and legal sanctions might enhance compliance in theory.
- Empirical observation: Finland, the Netherlands, and Sweden treat ceilings as political commitments without predefined legal sanctions; compliance rests on political support and monitoring.
- Legislative status alone may not ensure compliance without political support.

### III. FINLAND — design and experience
- Multi-annual expenditure ceilings introduced in 2003 after annual limits proved inadequate.
- 2004–2007: real ceilings on noncyclical central government primary expenditure established for all four years of the electoral period.
- New government in April 2007 maintained ceilings and introduced changes to increase flexibility.
- Outcomes: positive experience; procyclical pressure during cyclical upswing was kept at bay.

Key features and exact figures:
- Comprehensiveness:
  - Ceiling defined narrowly, covering some ¾ of the central government budget.
  - Excludes variations in interest payments, cyclical fluctuations, volumes in social security systems, old-age pension payments, certain infrastructure investments, and expenditure variations not affecting general government balance.
- Interest payments:
  - excluded from the ceiling.
  - example: upward revision of forecasted interest expenditure for 2011 by EUR 90 million between March and May of 2007, with a budget margin under the ceiling of EUR 101 (Ministry of Finance (2007c), p. 8).
  - Gross debt fell from 43.4 percent in 2003 to 32.1 percent in 2007 (noted elsewhere in Finland section).
- Noncyclical entitlements and pensions:
  - many benefits organized in Social Insurance Institution (KELA) and separate funds; included in the ceiling only as central government contributions.
  - central government contribution to civil servant pensions: 40 percent annual pension payments contributed from State Pension Fund.
- Inflation adjustment:
  - Ceilings for the four years are established in real terms.
  - Annual conversion into nominal terms uses a central government price index; the government does not disclose weights used in that composite index.
- Flexibility mechanisms:
  - Ceilings for 2008–2011 include a margin to absorb unexpected growth; margin increases slightly in later years.
  - EUR 100 million can be used on top of the ceiling for the following year to bridge transitions.
- Time horizon and procedure:
  - Four-year ceilings set for government term; ceilings not revised once established except for inflationary compensations and technical adjustments.
- Numerical definition and figures:
  - For 2008–2011 ceilings: compared with 2007, ceilings increase by EUR 1.3 billion in real terms, which is approximately 4.0, or a close to 1.0 percent increase per year on average.
  - Planning margin: EUR 300 million—approximately 0.9 percent of the ceiling—included in annual ceilings for 2008–2011 for discretionary supplementary-budget increases.
- Legislative status:
  - No legal requirement for Government to present expenditure ceilings beyond the upcoming budget year; medium-term ceilings are voluntary government self-restraint, determined by government decision and not formally approved by Parliament.
  - No formal sanctions for exceeding the expenditure ceiling.

### THE NETHERLANDS — design and experience
- Ceilings introduced in 1994; framework set in coalition agreements and has remained intact.
- Central government divided into three sub-sectors with aggregate ceilings broken down into sub-sector ceilings.
- Comprehensiveness and sub-ceiling practice:
  - Initial ambition: sub-ceilings binding with no offsetting shifts between sub-sectors.
  - Practical evolution allowed offsetting shifts between sub-sectors subject to aggregate ceiling.
- Interest payments:
  - Up until 2008, interest payments were included; Advisory Group recommendation (June 2006) led to exclusion for 2008–2011.
  - Historic fiscal outcomes: gross debt fell from 77.7 percent of GDP in 1993 to 46.8 percent of GDP in 2007.
  - Ratio of interest payments to general government expenditure fell from 10.7 in 1993 to 4.8 in 2007.
- Entitlements and cyclicality:
  - All entitlements’ gross expenditure is included under the ceiling; inclusion compelled policy interventions to control entitlement growth.
  - Inclusion helped address ageing costs by exposing old-age pension expenditure to scrutiny.
- FES (Fund for investments of national significance):
  - Fund primarily financed through natural gas revenue; intended for investments of national significance.
  - Expenditure from the FES is outside the ceilings; large inflows from high energy prices have put upward pressure on expenditure.
- Inflation adjustment:
  - Real ceilings translated each year into nominal ceilings using an updated estimate of inflation; final adjustment in April of the current budget year.
  - 2002 reform: changed deflator from GDP deflator to National Expenditure deflator; CPB assigned calculation to limit government opportunistic revisions.
- Flexibility mechanisms:
  - Departments allowed to carry 1.0 percent of unspent appropriations over to the following fiscal year.
  - Principle announced in 2002 that cyclical windfall gains on expenditure side were not to be used for discretionary increases.
- Time horizon:
  - Four-year horizon: ceilings calculated in year t for years t+1 to t+4.
- Numerical definition and EU link:
  - Government maintains commitment to the Stability and Growth Pact: general government net lending according to ESA 95 should be close to balance or in surplus, and should not exceed 3.0 percent for any given year.
  - Government strives for a structural surplus of 1.0 percent of GDP in 2011.
  - The source provides an explicit algebraic relationship (formula (5)) linking ceiling ê_{t+n} expressed as a ratio to GDP with forecasted revenue r_{t+n}, balance elasticity φ, output gap og_{t+n}, projected expenditure outside the ceiling oc_{t+n}, an accounting adjustment γ_{t+n}, planned tax reforms Δt_{t+n}, and contingency margin m_{t+n}.
- Legislative status:
  - Fiscal framework established in coalition agreements, not legislation.
  - Parliament approves annual budget but not multi-annual ceilings.
  - Aggregate expenditure ceilings have never been exceeded, though reallocations between sub-ceilings have occurred.
  - No predefined sanctions for violating the ceilings.

### Sweden — selected points (as presented across the source)
- Uses a three-year rolling ceiling model (nominal ceilings).
- Places entitlements under the ceiling (including unemployment benefits) in practice.
- Rolling ceilings can occasionally omit the third additional year; practice binds successive governments through the rolling mechanism.
- Country-specific studies cited in references document debates on gradual erosion and reform pressures.

### Cross-country conclusions — common outcomes and trade-offs
- All three countries (Finland, the Netherlands, Sweden) experienced positive outcomes with expenditure ceilings; ceilings were introduced after fiscal consolidation and used to maintain stability rather than create it.
- Political commitment—rather than legal entrenchment—underpins compliance in all three countries; no predetermined sanctions.
- Common features and trade-offs:
  - Interest expenditure generally excluded from ceilings.
  - Non-cyclical entitlements generally not excluded, though Finland excludes some transfer payments organized in funds outside the budget (excluding the government contribution).
  - Inflation adjustment differs: Finland and the Netherlands use real ceilings with deflators; Sweden uses nominal ceilings.
  - No country explicitly presents a formal methodology linking ceiling level to projected revenue and targeted balance in routine practice, despite fiscal sustainability objectives.
- Time horizons:
  - Finland and the Netherlands: four-year fixed ceilings for the government term.
  - Sweden: three-year rolling ceiling with occasional omission of the third additional year.

*italic: Source: _wp08282 (extracted content provided in the prompt)*

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

### References

### I. INTRODUCTION
- Maintaining a sound fiscal position is challenged by:
  - coordinating and prioritizing many resource bids;
  - difficulties in assessing the full economic effect of tax and expenditure policies;
  - limited time-horizon in decision making.
- Fiscal deterioration has occurred across regions, income levels, and ideologies, suggesting general forces undermining fiscal sustainability.
- Variation in fiscal performance across comparable countries is influenced by:
  - political culture and personal characteristics of elected representatives;
  - institutional arrangements for public decision making.
- Fiscal rules defined as formalized numerical restrictions on aggregate fiscal parameters can:
  - foster fiscal discipline by simplifying decision making;
  - promote interest in sustainability issues;
  - reduce scope for time-inconsistent decisions.
- Expenditure ceilings are a specific fiscal rule: an overall restriction on the outcome of all or most government expenditure, established well in advance of budget preparation.
  - Distinguishing features:
    - set in terms of ex post budget outcome rather than ex ante budgeted amounts;
    - covers all or most government expenditure and may not correspond to budget structure;
    - set before budget negotiations to guide preparation and execution;
    - often serve as the anchor for a medium-term framework.
- Six key characteristics of expenditure ceilings (discussed in paper and illustrated by Finland, the Netherlands, and Sweden):
  1. Comprehensiveness (which expenditure categories are included).
  2. Inflation correction and its practical obstacles.
  3. Formulation options for multi-annual ceilings.
  4. Principles for determining ceiling level and explicitness of link with other fiscal objectives.
  5. Options for managing unexpected events (flexibility mechanisms).
  6. Status of the ceiling along a continuum from unilateral government commitment to standing legislation.

### II. EXPENDITURE CEILINGS—WHAT ARE THEY, AND WHY DO THEY WORK?
- Purpose: government announces maximum level of expenditure and commits not to exceed it, neutralizing forces undermining fiscal sustainability.

A. Why An Expenditure Ceiling?
- Annual or short-run fiscal outcomes are affected by revenue fluctuations tied to economic activity; adjusting taxes quickly is impractical and may be undesirable (automatic stabilizers, tax smoothing).
- Expenditure ceilings are operationally feasible compared with balance or debt rules.
- Main origin of fiscal indiscipline is excessive accommodation of expenditure increases rather than tax cuts—making a binding restriction on total expenditure useful.
- Ceiling formulated in terms of ex post outcomes combats incentives to underestimate policy costs (fiscal illusion).
- In contexts with limited capacity to raise revenue (high tax wedge, mobile tax bases), controlling aggregate expenditure preserves fiscal sustainability.
- Preconditions for successful rule: political understanding and commitment; rules perceived as too restrictive are unlikely to survive.

B. Comprehensiveness
- A defining characteristic; effectiveness depends on which items are restricted.
- Principle: explicit completeness with motivated, unambiguous exceptions aids simplicity, transparency, and durability.
- Forecasting difficulties complicate comprehensiveness but do not per se justify exclusions.
- Relevant distinctions:
  - items subject to expansionary pressure should be included;
  - cases where government only intermediates non-distortionary revenue may justify exclusion (rare in practice).
- Entitlements and interest payments:
  - classification into mandatory vs. non-mandatory is time-horizon dependent; over 10–15 years virtually all items can be changed.
  - including entitlements under medium-term ceilings encourages early political response and integration into budget prioritization.
  - interest payments: often excluded because short-term variations (interest rates, exchange rates, debt structure) create volatility weakly related to sustainability; Netherlands included interest payments until 2007 but none of the three studied countries currently include interest payments under their ceilings.

C. Cyclically Sensitive Items
- Trade-off between allowing countercyclical expenditure and preserving long-term fiscal sustainability.
- Examples:
  - Netherlands and Sweden place all entitlements (including unemployment benefits) under the ceiling.
  - Finland excludes the majority of cyclically sensitive items from its ceiling.
- Practical difficulties:
  - cyclically adjusted ceilings require accurate assessment of output gap and elasticity of expenditure to cycles—challenging, especially for medium-term ceilings.
  - classifying expenditure into structural vs. cyclical reduces transparency and invites manipulation.
- OECD estimate: approximately ¾ of automatic stabilization is on the revenue side and ¼ on the expenditure side on average; new EU members average ⅞ on revenue side (Girouard and André (2005)).

D. Non-distortionary Earmarked Revenue
- Where expenditure is directly linked to non-distortionary revenue (e.g., EU payments, foreign grants, user fees with full cost recovery), exclusion from ceiling can be justified since there is no impact on tax wedge or government balance.
- Treatment differs among countries:
  - Finland: principle of not including expenditure that is circular (government as intermediary).
  - Netherlands: ceiling defined in net terms—offsets certain expenditure by revenue.
  - Sweden: fundamental principle of gross treatment, with exceptions.
- Practical concerns: national co-financing of EU programs, administrative financing, and implementation delays can affect annual expenditure profiles.

E. Investment Expenditure
- Risk that medium-term aggregate expenditure restriction could distort public investment, particularly infrastructure.
- All three studied countries treat investment partly separately; none completely exclude investment from ceilings.
- Issues:
  - short-run discretion is limited; governments may cut investments when total expenditure growth exceeds projections;
  - indivisibility and timing uncertainty of investment payments (cash basis) can create year-to-year volatility.
- Sale of assets to reduce debt service could be induced by including interest payments in ceilings—potentially undesirable.

C. Inflation Adjustments
- Adjusting ceilings for inflation analogous to comprehensiveness trade-offs.
- Country practices:
  - Finland and the Netherlands: four-year ceilings determined in real terms and converted to nominal terms before annual budget preparation.
  - Sweden: three-year ceilings set in nominal terms.
- Advantages of real ceilings: room under ceiling unaffected by errors in medium-term inflation forecasting; avoids expansion or squeeze of real room due to inflation surprises.
- Translation issues:
  - converting real ceilings to nominal figures introduces ambiguity and opportunities to revise deflators.
  - non-uniform inflationary effects across government expenditure complicate choice of deflator; a government-expenditure-based deflator reduces mismatch but can reduce transparency.
- Nominal ceilings can under some circumstances introduce countercyclical effects via inflation changes influencing nominal expenditure room.

D. Mechanisms to Manage Expenditure Fluctuation
- Objective: restrict structural rather than actual expenditure; allow justified temporary variation.
- Need for flexibility depends on ceiling construction:
  - comprehensive and nominal ceilings require more flexibility.
  - longer horizons increase forecasting uncertainty, implying larger required contingency margins.
- Options and practices:
  - contingency margins (planned expenditure set below ceiling) to absorb unforeseen increases;
  - limited carry-overs and technical offsets; excessive flexibility risks eroding discipline.
- Possible approaches for diminishing contingency margin over time: allow use as planning margin for reforms or successive reductions of the expenditure ceiling absent upward revisions.

E. Time Horizon
- Two models: fixed-term multi-year ceilings (Finland, the Netherlands — four years) vs. rolling ceilings (Sweden — add a new annual ceiling each year, yielding binding ceilings for three years).
- Trade-offs:
  - fixed multi-year ceilings provide policy envelope for a government’s term and avoid intra-government annual disputes;
  - rolling ceilings allow more medium-term discretion but can bind incoming governments to prior policy choices.
- Minimum requirement: decision on the ceiling must be made before budget negotiations.

F. Numerical Definition—Growth Rate, Percentage of GDP or Absolute Figure
- Possible formulations for ceiling Ênt (ceiling for year t+n):
  - linked to revenue and targeted fiscal balance:
    OCntTntntntnt EBTRE ++++ −−Δ+=ˆ
    - where ΔTnt+ is effect of tax reforms not included in revenue forecast and OCnt+ is forecasted government expenditure outside the ceiling.
    - alternative form expressing increases over time:
      OCntntnt ETRE &&+ + −Δ+=ˆ
  - expressed as constant ratio to GDP:
    POTntnt GDPE ++ ×=βˆ
  - expressed as constant rate of expenditure growth:
    φ=E&ˆ
- Explicitly linking ceilings to revenue, potential GDP, or balance targets reduces discretion but may be politically unacceptable and subject to forecast bias.

G. Legislative Status
- Intuition: legislative enshrinement and legal sanctions might enhance compliance.
- Empirical observation: Finland, the Netherlands, and Sweden treat ceilings as political commitments without predefined legal sanctions; all three frameworks have ceilings as political commitments.
- Legislative status alone may not ensure compliance without political support.

### III. FINLAND
- Finland introduced multi-annual expenditure ceilings in 2003 after annual expenditure limits proved inadequate.
- 2004–2007: real ceilings on noncyclical central government primary expenditure established for all four years of the electoral period.
- New government in April 2007 maintained ceilings and introduced changes to increase flexibility.
- Outcomes: positive experience; procyclical pressure during cyclical upswing was kept at bay.

A. Comprehensiveness
- Ceiling defined narrowly, covering some ¾ of the central government budget.
  - Excludes variations in interest payments, cyclical fluctuations, volumes in social security systems, old-age pension payments, certain infrastructure investments, and expenditure variations not affecting general government balance.
  - Consequences:
    - insulation from volatility and cyclical interference;
    - complexity and limited outside verifiability;
    - leaving part of central government expenditure outside the ceiling may limit effectiveness.
- Interest Payments:
  - excluded from the ceiling.
  - example: upward revision of forecasted interest expenditure for 2011 by EUR 90 million between March and May of 2007, with a budget margin under the ceiling of EUR 101 (Ministry of Finance (2007c), p. 8).
  - debt reduction from 43.4 percent in 2003 to 32.1 percent in 2007 noted; exclusion meant falling interest payments did not create additional short/medium-term room under ceiling.
- Noncyclical Entitlements and Old-age Pensions:
  - majority of non-employment-related benefits organized in Social Insurance Institution (KELA), separate from budget; included in the ceiling only as central government contributions to these systems.
  - guarantee payments supplementing employer/employee contributions to national pensions, unemployment allowances, housing allowances are excluded.
  - earnings-related pensions (except civil servant pensions) are organized in separate funds and not included; civil servant pensions are fully included with 40 percent annual pension payments contributed from State Pension Fund.
  - central government contributions to entitlement systems vary with cycle; evidence exists of covariance between unemployment and disability (Ministry of Finance (2007a), p. 73 and p. 75; IMF (2007a)).
- Cyclically Sensitive Items:
  - majority excluded from ceiling to allow automatic stabilizers to operate.
  - unemployment benefits and some non-employment benefits (housing allowance, pay security) excluded.
  - changes caused by discretionary modifications to entitlement regulation are included under the ceiling.
  - unemployment compensation organized in multiple systems (basic scheme via KELA, earnings-related via 36 unemployment funds, labour market support) — see footnote details.
  - evidence that almost half of long-term unemployed move between labor market programs and unemployment (IMF (2007b), p. 5).
  - central government contributions to old-age pensions, unemployment funds, incapacity benefits, and social assistance are excluded due to employer/employee contributions and government subsidiary responsibility.
  - following 2007 changes, central government contribution to incapacity insurance was included under the ceiling because cyclical variance was marginal.
- Non-distortionary Earmarked Revenue:
  - budget expenditure funded by specific non-tax contributions excluded.
  - excluded sources include revenue from betting, lotteries, Slot Machine Association earmarked uses, EU budget-financed expenditure (offset by revenue), and separately appropriated VAT paid by ministries/agencies.
  - rationale: no impact on government balance and to avoid biasing outsourcing decisions.
- Investment Expenditure:
  - infrastructure investment included under the ceiling.
  - some flexibility introduced to manage uneven investment payment patterns.
  - special provision: if revenue from sale of government-owned enterprise shares is exceptionally high, a percentage can be used for expenditure outside the ceiling—parameters have changed over time (initially 10 percent above EUR 500 million in 2003; in 2006 increased to 20; after 2007 redefined to maximum of 25 percent of revenue exceeding EUR 400 million, but no more than EUR 150 million).
  - financial investment converting asset types is not considered expenditure and is not included under ceiling; defaults on loans are treated as subsidies (expenditure), reducing net lending per ESA 95.
  - government announced central government deficit should not exceed 2.5 percent of GDP (Ministry of Finance (2007d), p. 9).

B. Inflation Adjustment
- Ceilings for the four years are established in real terms.
- Government decision in March each year converts ceilings into upcoming year’s price level using updated deflator of the central government price index and makes technical adjustments.
- Central government price index is a weighted average of various price and wage indices: pension indices, consumer price index, state subsidy index, building cost index, domestic and EU GDP indices, price index for domestic supply, central government pay raises, and changes in social security contributions.
- Government does not disclose weights used; inflationary adjustments not replicable by outsiders.

C. Mechanisms to Manage Expenditure Fluctuations
- Ceilings for 2008–2011 include a margin to absorb unexpected growth in ceiling-restricted expenditure; margin increases slightly in later years reflecting greater uncertainty.
- Additional flexibility measures introduced:
  - EUR 100 million can be used for expenditure on top of the ceiling for the following year to bridge transitions and reduce incentive to maximize expenditure under ceiling in a year.
  - possibility to offset changes in the ceiling between two years to adjust for large deferred payments (technical adjustments), mitigating investment timing problems.

D. Time Horizon
- Expenditure ceilings set for the four years of the government’s term; a new government is not constrained by prior ceilings.
- Ceilings are not revised once established, except for inflationary compensations and technical adjustments to equalize budget structure changes.
- Government decision on ceilings includes tentative allocation of expenditure to administrative branches for each year (includes both included and excluded items); final allocation for upcoming year set in Budget Bill to parliament in September; beyond that, updates presented in future ceiling decisions and Budget Bills.

E. Numerical Definition
- Government does not present an explicit relationship between the expenditure ceiling and other fiscal parameters for central or general government balance.
- Government decision states ceilings should take into account appropriations necessary to execute government programmes or other government decisions.
- For 2008–2011 ceilings: compared with 2007, ceilings increase by EUR 1.3 billion in real terms, which is approximately 4.0, or a close to 1.0 percent increase per year on average.
- Planning margin: EUR 300 million—approximately 0.9 percent of the ceiling—included in annual ceilings for 2008–2011 for discretionary supplementary-budget increases.
- Because ceilings are set in real terms and deflated by a central government price index, central government expenditure as a ratio of GDP may not follow the real growth of the ceiling; central government price index grew more rapidly than GDP deflator in the first period with ceilings, allowing ratio of expenditure to GDP to increase.

F. Legislative Status
- No legal requirement for the Government to present expenditure ceilings for years beyond the upcoming budget year.
- Medium-term ceilings are voluntary government self-restraint, determined and announced by government decision and not formally approved by Parliament.
- No formal sanctions for exceeding the expenditure ceiling.
- Compliance is primarily monitored by the Ministry of Finance; complexities and opaque inflation adjustments make outside verification difficult.
- Political commitment to compliance is high; performance against ceilings discussed in media and political debate.

*italic: Source: _wp08282 - References (extracted content provided in the prompt)*

### introduction, the framework has remained essentially intact, and enjoys wide support across

### _wp08282 - introduction, the framework has remained essentially intact, and enjoys wide support across

### Comprehensiveness
- Expenditure ceilings cover virtually all expenditure of the central government sector and are multi-year (four years) and sector-allocated in the coalition agreement.
- Central government is divided into three sub-sectors: 1) the core government sector; 2) the health care sector; and 3) the social security and labour market sector.
- Aggregate ceilings for each of the four years are broken down into sub-sector ceilings.
- Initial ambition: sub-ceilings binding, no offsetting shifts between sub-sectors; overruns in a sub-ceiling would require compensating expenditure cuts within that sub-sector.
- Practical evolution:
  - 1994–1997: overruns under one sub-ceiling were compensated by lower expenditure under other sub-ceilings while aggregate ceiling was still observed.
  - 1998–2001: ability to make offsetting shifts between sub-sector ceilings (subject to the aggregate ceiling) was officially recognized; overruns in health care subsector compensated by lower expenditure primarily in social security and labour market sectors.
- Principle: compensations intended only for cost overruns incurred through existing policies; new policy expenditure must fit under original sub-ceilings.

### Interest Payments
- Up until 2008, interest payments on government debt were included under the aggregate expenditure ceiling, covered by the sub-ceiling on the core government sector.
- Advisory Group for Budgetary Principles’ recommendation (June 2006) led to exclusion of interest payments from the ceilings for the period 2008–2011 on the grounds that interest is volatile and could be procyclical.
- Historic fiscal outcomes since framework introduction:
  - Gross debt fell from 77.7 percent of GDP in 1993 to 46.8 percent of GDP in 2007.
  - Ratio of interest payments to general government expenditure fell from 10.7 in 1993 to 4.8 in 2007.
- Decline in nominal interest rate on the debt and lower inflation/ lower risk premium contributed to interest developments.
- Declining interest payments, when not reflected in forecasts underpinning expenditure ceilings, freed up room for other expenditure.
- Until 2007, macroeconomic assumptions used in fiscal policy were cautious (consciously underestimating GDP growth and real interest rates), creating an asymmetric risk of interest rate surprises; the use of cautious assumptions was discontinued in the coalition agreement for 2008–2011.

### Noncyclical Entitlements and Old-age Pensions
- Generous disability benefits and numerous legislated benefits (support to university students, housing support to low income groups) and an upward trend in entitlement beneficiaries strained public finances.
- All entitlements’ gross expenditure is included under the expenditure ceiling, forcing government interventions (improved enforcement, legislative changes, or spending cuts elsewhere) to comply with ceilings as entitlements grow.
- Measures tightened the welfare system and drastically reduced the number supported by disability benefits, diminishing social security expenditure.
- Evidence indicates social security expenditure may be countercyclical: more individuals apply for disability benefits during cyclical upturns than downturns.
  - Interpretation: social security benefits as a "luxury good" in affluent conditions; benefit systems act as communicating vessels with individual movement between unemployment and disability benefits.
- Inclusion of all transfer systems under the ceiling captures overall welfare expenditure irrespective of support channel.
- Single most important challenge to public finances: cost of ageing.
  - By including all expenditure affected by demographic change—including old-age pension expenditure—sustainability is exposed to scrutiny and incorporated into the fiscal framework.

### Cyclically Sensitive Items
- Expenditure ceiling covers gross expenditure for unemployment benefits; cyclical downturns increase expenditure pressure and squeeze room under the ceiling; buoyant economy creates scope as unemployment benefits decrease.
- In the Netherlands, real ceilings are translated into nominal ceilings each year using an updated deflator; such translation does not mitigate procyclical pressures as would occur under nominal ceilings when unemployment and inflation move in opposite directions.
- OECD estimate: elasticity of current primary expenditure with respect to the output gap is -0.23 for the Netherlands, compared with OECD average of -0.10 and Euro area average of -0.11.
  - Note: this estimate accounts only for unemployment benefits’ impact; other cyclically sensitive items could make the elasticity underestimated or overestimated.
  - Earlier OECD elasticity for the Netherlands was -0.70; revision to -0.23 due to new technique including only unemployment benefits.
  - Evidence of covariance between unemployment and recipients of social security payments could diminish procyclical swings and imply elasticity may be overestimated.
- Historical unemployment and management under ceilings:
  - 1994 unemployment: 6.8 percent.
  - 2001 unemployment: 2.2 percent.
  - 2002–2005 cyclical downturn: unemployment increased by 2 percentage points to 4.7 percent in 2005.
  - Government managed the 2002 downturn within existing ceilings, partly by introducing a small margin under the ceiling in 2002.
  - Estimated unemployment in 2007: approximately 3.2 percent.
- Inclusion of unemployment benefits under the ceiling has not been a prohibitive obstacle to running countercyclical fiscal policies despite substantial cyclical swings.
- Recent review of the fiscal framework attempted to limit use of room under the ceiling created by an upswing by stipulating it cannot be used for structural measures; in practice identifying whether room is structural or cyclical is difficult.

### Non-distortionary Earmarked Revenue
- Expenditure ceiling is set in terms of net expenditure: certain non-tax revenues (school fees, various fines, dividends from the central bank and state corporations, interest received) directly offset expenditure rather than being treated as revenue.
- Increase in such non-tax revenue allows extra expenditure without impacting the ceiling; a shortfall requires expenditure cuts to maintain the margin under the ceiling.
- Allowing certain transactions to be reported on a net basis is accepted under the Dutch fiscal framework to create incentives for demand-driven services.
- The extent of such non-tax revenue is limited.

*Source: _wp08282 - introduction, the framework has remained essentially intact, and enjoys wide support across*

### 1993. This fund, primarily financed through natural gas revenue,

### _wp08282 - 1993. This fund, primarily financed through natural gas revenue,

### FES (Fund for investments of national significance)
- Purpose and financing:
  - Fund primarily financed through natural gas revenue.
  - Intended for investments of national significance; aim “turning assets under ground into assets above ground.”
  - In early years investment directed almost exclusively to infrastructure in the transport sector; more recently investments in knowledge, innovation, and the environment have been financed through the fund.
  - A second source of financing is made up of the reduction in interest resulting from the amortization of government debt from the sale of equity in public corporations.
- Governance and concerns:
  - Criteria for expenditure under FES are not clearly defined, illustrated by use of the fund to finance expenditure resulting from abolishing certain school fees.
  - Expenditure from the FES is outside the ceilings, and large inflows from high energy prices have put upward pressure on expenditure.
  - Investments undertaken by the fund are subject to a cost-benefit analysis by the CPB, but concern has been raised over the quality of FES-financed projects.
  - Recently, principle established that medium-term plans for investment financed by FES have to be set at the beginning of a government term.

### Inflation Adjustment (Netherlands)
- Ceiling design:
  - The expenditure ceilings, established in the coalition agreement, are set in real terms.
  - Each year the real ceiling is translated into a nominal ceiling using an updated estimate of inflation.
  - Final adjustment of the expenditure ceiling takes place in April of the current budget year, using an updated forecast of the deflator. Differences between actual inflation of national expenditure and the forecasted deflator are not adjusted for.
- Heterogeneous inflation effects:
  - Significant part of government expenditure affected by price and wage increases, but not uniformly: wage-sensitive items (civil service wage bill, wage-indexed transfers) vs goods (purchase of military equipment); several budget items set in fixed nominal terms.
  - Depending on the choice of deflator, translation from real to nominal ceilings impacts the margin under the ceiling: items inflating more rapidly than the deflator crowd out ceiling expenditure; items not sensitive to price/wage increases increase the margin.
  - Rapid decrease of unemployment in latter 1990s created labour shortages, put upward pressure on wage level; nominal wage inflation—and consequently expenditure sensitive to wage level—rose more rapidly than the GDP deflator, putting pressure on ceiling-restricted expenditure in real terms.
- Reform of deflator:
  - Recommendation of the Advisory Group for Budgetary Principles led to change from the GDP deflator to the National Expenditure deflator in 2002.
  - Because of this change, variations in import and export prices no longer impact the inflation adjustment of the expenditure ceiling in the short term, reducing terms-of-trade effects to some extent.
  - By defining the deflator in the fiscal framework and assigning calculation to the CPB, opportunities for the government to make annual revisions to create additional nominal room under the ceiling are limited.
- Elasticity point:
  - The elasticity of government expenditure to current year inflation would typically be low, as the inflation adjustment of most government expenditure has already been determined.

### Mechanisms to Manage Expenditure Fluctuations (Netherlands)
- Sources of uncertainty:
  - Four-year horizons and comprehensive ceilings imply ceiling-restricted expenditure may deviate considerably from forecasts due to cyclical developments, unforeseen variations in eligibility, and shifting appropriated funds between fiscal years.
  - Departments are allowed to carry 1.0 percent of unspent appropriations over to the following fiscal year.
  - Removal of interest payments from the ceiling reduces some uncertainty.
- Historical experience and principles:
  - Early years: decreasing expenditure for unemployment benefits was used to finance new policy measures; this deteriorated the structural fiscal balance and contributed to rapid deterioration of public finances during 2002 and 2003.
  - In 2002 government announced principle that cyclical windfall gains on the expenditure side were not to be used for discretionary expenditure increases (aim to avoid procyclical fiscal policies).
  - Downturn in 2003 led to general government balance deterioration and breach of the Stability and Growth Pact’s deficit limit of 3.0 percent of GDP.
  - Definition of “cyclical windfall” is not clearly defined and is subject to interpretation by the Ministry of Finance.
- Policy responses to pressure on the ceiling:
  - Government responded with expenditure-reducing measures including tightening the social security system and introducing changes to reduce dependency and increase labour supply.
  - Shifting expenditure to the FES fund outside the ceiling has been used to some extent.
- Tax expenditure and escape routes:
  - Possibility of circumventing the expenditure ceiling by introducing new tax expenditure after ceilings established is recognized; in principle ceilings should be adjusted for such substitutions.
  - Netherlands introduced a set of criteria that must be met by all new tax expenditure, creating barriers to using tax expenditure to avoid the ceiling.

### Time Horizon
- Four-year horizon:
  - Ceilings are calculated in year t for years t+1, t+2, t+3 and t+4; potential GDP growth and output gap estimated for all years in coalition agreement enabling forecast of cyclical revenue and expenditure.
  - Uncertainty increases with horizon; cyclical surprises can strain the framework (example: unexpected downturn in 2003).
  - Four-year horizon could limit room for countercyclical policy on the expenditure side.

### Numerical Definition (Netherlands)
- No explicit formula publicly used, but government links to Stability and Growth Pact:
  - Government maintains commitment to EU’s Stability and Growth Pact: general government net lending according to ESA 95 should be close to balance or in surplus, and should not exceed 3.0 percent for any given year.
  - Government estimates structural surplus necessary to remain above 0.5 to 1.0 percent of GDP given sensitivity to cyclical variations.
  - Government strives for a structural surplus of 1.0 percent of GDP in 2011.
- Relationship and formula given in source:
  - An expenditure ceiling ê_{t+n} for year t+n, expressed as a ratio to GDP, consistent with targeted general government structural surplus s_{t+n}, is given by:
    - () ntntnt
      oc ntntntntnt
      mteogsre
      ++++++++ +Δ+−−+−=γφ1
      ˆ                                (5)
    - Where r_{t+n} is forecasted general government revenue as a percentage of GDP (ESA 95), φ is the balance elasticity with respect to the output gap, og_{t+n} the output gap for year t+n, oc_{t+n} projected expenditure outside the ceiling, γ_{t+n} a factor adjusting for difference in accounting basis between ceiling restricted expenditure and ESA 95, Δt_{t+n} planned tax reforms not included in revenue forecast (ratio to GDP), and m_{t+n} the contingency margin (ratio to GDP).
  - The Government does not explicitly express this relationship as the method for setting ceilings; coalition agreements outline policies and ceilings accommodate realistic projection of resulting expenditure.
- Political description quoted:
  - “The multi-annual expenditure ceilings are determined at the start of a new term of government. They are not simply policy ambitions about the size of public expenditure as a percentage of GDP without any clear and realistic underpinning. They are bottom-up calculated levels of expected public expenditure in constant prices. They reflect the coalition agreement and are intended to be realistic estimates of expected expenditure.” — Bos (2007).

### Legislative Status (Netherlands)
- Fiscal framework established in coalition agreements, not in legislation.
- Parliament approves annual budget but not multi-annual expenditure ceilings.
- Lack of formal legal status has not diminished government’s commitment; framework intact since introduction in 1994.
- Aggregate expenditure ceilings have never been exceeded, though reallocations between sub-ceilings have occurred.
- No predefined sanctions for violating the ceilings.

### Cross-country conclusions (summary highlights from the source)
- All three surveyed countries (Finland, the Netherlands, Sweden) have had positive experiences with expenditure ceilings; each performed well since introduction of ceilings.
- Ceilings were introduced after fiscal consolidation and have been used to maintain stability rather than create it.
- Political commitment—rather than legal entrenchment—underpins compliance in all three countries; no predetermined sanctions.
- Common features and trade-offs:
  - Interest expenditure generally excluded from ceilings.
  - Non-cyclical entitlements not excluded, though Finland excludes some transfer payments organized in funds outside the budget (excluding the government contribution).
  - Inflation adjustment differs: Finland and the Netherlands use real ceilings (with deflators); Sweden uses nominal ceilings.
  - No country explicitly presents a formal methodology linking ceiling level to projected revenue and targeted balance in routine practice, despite fiscal sustainability objectives.
- Time horizons:
  - Finland and the Netherlands: four-year fixed ceilings for the government term.
  - Sweden: three-year rolling ceiling with occasional omission of the third additional year.

*Source: _wp08282 - 1993. This fund, primarily financed through natural gas revenue,*

### REFERENCES

### _wp08282 - REFERENCES

### General section
- Andersen, Torben M., 2005, “Is there a Role for an Active Fiscal Stabilization Policy?” CESifo Economic Studies, Vol. 51, No. 4/2005, pp. 511-547.
- Barro, Robert J., 1979, “On the Determination of Public Debt,” Journal of Political Economy, Vol. 87, No. 5, pp. 940-971.
- Blanchard, O., 1990, “Suggestions for a New Set of Fiscal Indicators,” OECD Economics and Statistics Working Paper No. 79 (Paris: OECD).
- Blöndal, Jón R., 2004, “Issues in Accrual Budgeting,” OECD Journal on Budgeting, Vol. 4, No. 1 (Paris: OECD).
- Boije, Robert, 2004, “The General Government Structural Budget Balance,” Sveriges Riksbank Economic Review No. 1 (Stockholm: Sveriges Riksbank).
- European Commission, 2006, “Numerical Fiscal Rules and Institutions for Sound Public Finances,” Public Finances in EMU 2006, pp. 149–168. (Brussels).
- Ferehohn, John, and Keith Krehbiel, 1987, “The Budget Process and the Size of the Budget”, American Journal of Political Science, No. 31, pp. 296-320.
- Girouard, Nathalie and Christophe André, 2005 “Measuring Cyclically  Adjusted Budget Balances for OECD Countries,” OECD Economics Department Working Papers, No. 434 (Paris: OECD).
- Grilli, V., D. Masciandaro, and G. Tabellini, 1991, ”Political and Monetary Institutions and Public Financial Policies in the Industrial Countries,” Economic Policy, No. 13, pp. 343–392.
- Hallerberg, Mark, and Jürgen von Hagen, 1997, ”Electoral Institutions, Cabinet Negotiations, and Budget Deficits within the European Union,” CEPR Working Paper No. 1555 (London: Centre for Economic Policy Research).
- Hemming, Richard, Michael Kell, and Selma Mahfouz, 2002, “The Effectiveness of Fiscal Policy in Stimulating Economic Activity—A Review of the Literature,” IMF Working Paper 02/208 (Washington: International Monetary Fund).
- Koen, Vincent, and Paul van den Noord, 2005, “Fiscal Gimmickry in Europe: One-off Measures and Creative Accounting,” OECD Economics Department Working Papers No. 417 (Paris: OECD).
- Lijphart, A., 1999, Patterns of Democracy: Government Forms and Performance in Thirty-six Countries (New Haven: Yale University Press).
- Kopits, G., and S. Symansky, 1998, Fiscal Policy Rules, IMF Occasional Paper No. 162 (Washington: International Monetary Fund).
- Kopits, G., 2001, “Fiscal Rules: Useful Policy Framework or Unnecessary Ornament?” IMF Working Paper 145 (Washington: International Monetary Fund).
- Murchison, S., and J. Robbins, 2003, “Fiscal Policy and the Business Cycle: A New Approach to Identifying the Interaction,” Canadian Department of Finance Working Paper No. 6 (Ottawa: Canadian Department of Finance).
- Perotti, Roberto, 2005, “Estimating the Effects of Fiscal Policy in OECD Countries,” CEPR Discussion Paper No. 4842 (London: Centre for Economic Policy Research).
- Persson, Torsten and L.E.O. Svenssson, 1989, ”Why a Stubborn Conservative Would Run a Deficit: Policy with Time-inconsistent Preferences,” Quarterly Journal of Economics, No 104.
- Roubini, N. and J. D. Sachs, 1989, ”Political and Economic Determinants of Budget Deficits in Industrial Democracies,” European Economic Review, No. 33.
- Schick, Allen, 2003, “The Role of Fiscal Rules in Budgeting,” OECD Journal on Budgeting, Vol. 3, No. 3 (Paris: OECD).
- von Hagen, Jürgen, 1992, ”Budgeting Procedures and Fiscal Performance in the EC,” Economic Papers, DG-II, (Brussels: European Commission).

### Finland
- Blöndal, Jón R., Jens Kronmann Kristensen, and Michael Ruffner, 2002, “Budgeting in Finland,” OECD Journal on Budgeting, Vol 2, No. 2 (Paris: OECD).
- Finnish Ministry of Finance, 2003, Decision on Central Government Spending Limits in 2004–2007, VM3/21/2003, Helsinki.
- Finnish Ministry of Finance, 2006, Stability Programme Update for Finland, Helsinki.
- Finnish Ministry of Finance, 2007a, Fiscal Policy rules and the Reform of Spending Limits in Finland, Helsinki.
- Finnish Ministry of Finance, 2007b, Stability Programme Update for Finland 2007, Helsinki.
- Finnish Ministry of Finance, 2007c, Decision on Revised Central Government Spending Limits for 2008–2011, VM17/214/2007, Helsinki.
- Finnish Ministry of Finance, 2007d, Budget Review 2008, Helsinki.
- Finnish Prime Minister’s Office, 2007, Government Programme of Prime Minister Matti Vanhanen’s Second Cabinet, Helsinki.
- Hemmings, Philip, David Turner, and Seija Parviainen, 2003, “Enhancing the Effectiveness of Public Spending in Finland,” OECD Economic Department Working Paper No. 358 (Paris: OECD).
- International Monetary Fund, 2005, Finland Selected Issues, Fiscal Sustainability in Finland: The Role of Population Ageing and Structural Reforms (Washington).
- International Monetary Fund, 2007a, Finland Selected Issues (Washington).
- International Monetary Fund, 2007b, Finland: 2007 Article IV Consultation—Staff Report (Washington).
- Kimmunen, Helvi, 2006, “Spending Rules Bring Stability to Fiscal Policy in Finland,” Bank of Finland Bulletin No. 3, Helsinki.
- Maiväli, Mart, 2006, “Structural Unemployment: a Blot on the Finnish Success Story,” ECFIN Country Focus, Vol. 3, Issue 5.
- Organization for Economic Cooperation and Development, 2006, Economic Survey: Finland, (Paris: OECD).

### The Netherlands
- Berndsen, Ron J., 2001, “Postwar Fiscal Rules in The Netherlands: What can we Learn for EMU?”
- Bos, Frits, 2006, “Summary of CPB Document 209, Dutch Public Expenditure in Historical Perspective.” (The Hague: Netherlands Bureau for Economic Policy Analysis).
- Bos, Frits, 2007, “The Dutch Fiscal Framework—History, Current Practice and the Role of the CPB,” CPB Document No. 150 (The Hague: Netherlands Bureau for Economic Policy Analysis).
- van den Ende, Leo, Amir Haberham, and Kees den Boogert, 2004, “Tax Expenditures in the Netherlands,” in Tax Expenditures—Shedding Light on Government Spending through the Tax System, ed. by H. Brixi, C.M.A. Valenduc, and L.I. Swift (Washington: The World Bank).
- van Ewijk, Casper and Ted Reininga, 1999, “Budgetary Rules and Stabilisation,” CPB Report 99/4 (The Hague: Netherlands Bureau for Economic Policy Analysis).
- Heeringa, Willem, and Yngve Lindh, 2001, “Dutch versus Swedish Budgetary Rules: A Comparison,” paper presented at the seventh Banca d’Italia workshop on public finances, “Public Expenditure,” Perugia, Italy.
- International Monetary Fund, 2004, Netherlands Selected Issues, Washington.
- International Monetary Fund, 2005, Netherlands Selected Issues, Washington.
- International Monetary Fund, 2006, Report on the Observance of Standards and Codes (ROSC) Fiscal Transparency Model, Washington.
- Ministry of Finance of the Netherlands, 2004, Stability Programme of the Netherlands—November 2004 Update.
- Ministry of Finance of the Netherlands, 2006, Stability Programme of the Netherlands—November 2006 Update.
- Ministry of Finance of the Netherlands, 2007, Stability Programme of the Netherlands—November 2007 Update.
- Organization for Economic Cooperation and Development, 1999, “The Size and Role of Automatic Fiscal Stabilizers,” OECD Economic Outlook, No. 66.
- Organization for Economic Cooperation and Development, 2004, Economic Survey: Netherlands (Paris).
- Organization for Economic Cooperation and Development, 2006, Economic Survey: Netherlands, Paris.
- Tijsseling, I.C. and P.G.J. van Uden, 2004, Made in Holland—Dutch Public Finance: Lessons and Experiences, SDU Uitgevers, The Hague.

### Sweden
- Balassone, F., 2005, “The Swedish Fiscal Framework: Towards Gradual Erosion,” IMF Selected Issues (Washington: International Monetary Fund).
- Boije, Robert, 2004, “The General Government Structural Budget Balance,” Economic Review, No. 1, Sveriges Riksbank, Stockholm.
- Braconier, Henrik 2001, “Automatiska stabilisatorer och aktiv finanspolitik inom EMU (Automatic stabilizers and active fiscal policy in the EMU),” Study for the Government Commission Stabilitet och stabiliseringspolitik i EMU (Stability and stabilization policy in the EMU), SOU 2001:62 (Stockholm: Statens Offentliga Utredningar).
- Fischer, Jonas, 2005, “Swedish Budget Rules: Praise from Brussels, Pressure at Home,” ECFIN Country Focus, Vol. 2, No. 4,
- Fischer, Jonas, and Robert Boije, 2006, “The Swedish budget ‘model’: a genuine beauty or in need of a face lift?” paper presented at the EU seminar, “The Role of Fiscal Rules and Institutions in Shaping Budgetary Outcomes,” Brussels, November.
- Hansson Bruzewitz, Urban, 2002, “The Swedish Medium-Term Budget Framework” in“A Collection of Country Reports,” KDI School of Public Policy and Management, Seoul, Korea.
- Hansson-Brusewitz, Urban and Yngve Lindh, 2005, “Expenditure Ceilings and Fiscal Policy—the Sweden Experiences,” paper presented at the Banca d’Italia workshop on public finances, “Public Expenditure,” Perugia, Italy.
- Lindh, Yngve; and Gösta Ljungman, 2007, “Fiscal Rules and the Scope for Stabilisation Policy—the Case of Sweden”, paper presented at the Banca d’Italia workshop on public finances, “Public Expenditure,” Perugia, Italy.
- Ljungman, Gösta, 2007, “The Medium-Term Fiscal Framework in Sweden”, OECD Journal on Budgeting, Vol. 6, No. 3 (Paris: OECD).
- Molander, Per, 1999, “Reforming Budgetary Institutions: Swedish Experiences”, in Institutions, Politics and Fiscal Policy, ed. by J. von Hagen and R. Strauch (Boston: Kluwer Academic Publishers).
- Molander, P., 2001, “Budgeting Procedures and Democratic Ideals”, Journal of Public Policy, Vol. 21, No. 1, pp. 23–52.
- SOU 2000:61, Utvärdering och vidareutveckling av budgetprocessen (Evaluation and further development of the budget process) (Stockholm: Statens offentliga utredningar).
- Swedish Ministry of Finance, 2006, Updated Swedish Convergence Programme 2006 (Stockholm).
- Swedish Ministry of Finance, 2007, Updated Swedish Convergence Programme 2007 (Stockholm).

*Source: _wp08282 - REFERENCES*

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