## France: Selected Issues

_IMF Staff Country Reports, July 24, 2019_

## Source details

**Canonical URL:** [France: Selected Issues](https://www.imf.org/en/publications/cr/issues/2019/07/24/france-selected-issues-48524)

## Other formats

- [Markdown version](/en/publications/cr/issues/2019/07/24/france-selected-issues-48524/index.md)
- [Structured JSON version](/en/publications/cr/issues/2019/07/24/france-selected-issues-48524/index.json)
- [Bundle manifest](/en/publications/cr/issues/2019/07/24/france-selected-issues-48524/bundle-manifest.json)

## Bibliographic details
- Published: July 24, 2019
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513508467.002

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### Model and approach
- 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:
  - the level of public debt,
  - the cyclical position of the economy,
  - expectations about future shocks.

### Key findings
- 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.

### Policy implications and recommendations
- Fiscal consolidation is recommended to rebuild fiscal buffers ahead of the next downturn.
- 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, July 24, 2019*

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## Content in this bundle

- **France: Selected Issues; IMF Country Report No. 19/246; July 1, 2019**
  - [France: Selected Issues; IMF Country Report No. 19/246; July 1, 2019 (Markdown version)](/-/media/files/publications/cr/2019/1fraea2019003.pdf.md){rel="alternate" type="text/markdown"}
  - [France: Selected Issues; IMF Country Report No. 19/246; July 1, 2019 (PDF)](/-/media/files/publications/cr/2019/1fraea2019003.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/cr/issues/2019/07/24/france-selected-issues-48524_