{
  "title": "France: Selected Issues",
  "publication": "IMF Staff Country Reports, July 24, 2019",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2019/07/24/france-selected-issues-48524",
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  "summary": "This Selected Issues paper analyzes France’s fiscal stance using a structural stochastic model. The theoretical model features a forward-looking benevolent government that needs to decide the optimal fiscal stance given the level of public debt, the cyclical position of the economy, and expectations",
  "sections": [
    {
      "heading": "Model and approach",
      "content": "- Analyzes France’s fiscal stance using a structural stochastic model.\n- The theoretical model features a forward-looking benevolent government that decides the optimal fiscal stance given:\n  - the level of public debt,\n  - the cyclical position of the economy,\n  - expectations about future shocks."
    },
    {
      "heading": "Key findings",
      "content": "- A fiscal consolidation can help build buffers that could help France confront the next downturn from a stronger fiscal position.\n- On average, fiscal policy in France exhibited a deficit bias over the past four decades, being unable to react to either rising debt levels, or cyclical conditions.\n- A model-based analysis confirms that fiscal policy was generally looser than warranted by cyclical and debt sustainability considerations.\n- Part of the looseness is explained by policymakers needing to take decisions based on real-time output gap measures that are subject to uncertainty."
    },
    {
      "heading": "Policy implications and recommendations",
      "content": "- Fiscal consolidation is recommended to rebuild fiscal buffers ahead of the next downturn.\n- Strengthening the responsiveness of fiscal policy to debt dynamics and cyclical conditions is implied to reduce the observed deficit bias.\n- Improving real-time measurement and treatment of output gap uncertainty would reduce inadvertent policy looseness.\n\nFrance: Selected Issues, July 24, 2019\n\n---\n\n Content in this bundle\n\n- France: Selected Issues; IMF Country Report No. 19/246; July 1, 2019\n  - France: Selected Issues; IMF Country Report No. 19/246; July 1, 2019 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - France: Selected Issues; IMF Country Report No. 19/246; July 1, 2019 (PDF){rel=\"external\" type=\"application/pdf\"}"
    }
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  "bullets": [
    "[Markdown version](/en/publications/cr/issues/2019/07/24/france-selected-issues-48524/index.md)",
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    "Published: July 24, 2019",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9781513508467.002",
    "Analyzes France’s fiscal stance using a structural stochastic model.",
    "The theoretical model features a forward-looking benevolent government that decides the optimal fiscal stance given:",
    "A fiscal consolidation can help build buffers that could help France confront the next downturn from a stronger fiscal position.",
    "On average, fiscal policy in France exhibited a deficit bias over the past four decades, being unable to react to either rising debt levels, or cyclical conditions.",
    "A model-based analysis confirms that fiscal policy was generally looser than warranted by cyclical and debt sustainability considerations.",
    "Part of the looseness is explained by policymakers needing to take decisions based on real-time output gap measures that are subject to uncertainty.",
    "Strengthening the responsiveness of fiscal policy to debt dynamics and cyclical conditions is implied to reduce the observed deficit bias.",
    "Improving real-time measurement and treatment of output gap uncertainty would reduce inadvertent policy looseness.",
    "**France: Selected Issues; IMF Country Report No. 19/246; July 1, 2019**"
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