## Government Role and the Efficiency of Policy Instruments

_IMF Working Papers, October 1, 1995_

## Source details

**Canonical URL:** [Government Role and the Efficiency of Policy Instruments](https://www.imf.org/en/publications/wp/issues/2016/12/30/government-role-and-the-efficiency-of-policy-instruments-1943)

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## Bibliographic details
- Authors: Vito Tanzi
- Published: October 1, 1995
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451852349.001

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### Summary
- Comparisons about the role of the government in an economy are usually made by reference to the share of tax revenue or of public expenditure in gross domestic product.
- Governments often use other tools for pursuing their objectives; the paper discusses these other tools, shows the extent to which they can replace the traditional fiscal instruments, and assesses their quantitative importance.
- Various highly speculative hypotheses are advanced about the role of these other tools in countries at different levels of development.

### Major themes and analysis
- Alternative instruments to traditional fiscal tools:
  - The paper identifies and discusses nontraditional tools governments use to pursue objectives beyond tax revenue and public expenditure.
  - It assesses the extent to which these other tools can substitute for traditional fiscal instruments.
  - Quantitative importance of these other tools is evaluated (details and estimates are in the full working paper).
- Cross-country and development-level hypotheses:
  - The paper advances various highly speculative hypotheses about how the role of these other tools differs across countries at different levels of development.
- Relation to public sector concepts:
  - Topics discussed relate to Central banks, Economic sectors, Expenditure, Foreign exchange, Public sector, Quasi-fiscal operations, Revenue administration.

### Key findings and emphases
- Emphasis on measurement beyond standard metrics:
  - Standard comparisons based on tax revenue or public expenditure shares in GDP can miss other significant government activities.
- Quantitative assessment objective:
  - The author aims to show the extent and quantitative importance of nontraditional government tools relative to fiscal instruments.
- Speculative nature of some conclusions:
  - The paper explicitly advances "highly speculative hypotheses" rather than definitive assertions for cross-country differences.

### Policy implications and recommendations
- Consider broader measurement of government role:
  - Policymakers and analysts should consider nontraditional instruments when evaluating the government's economic role and designing reforms.
- Analyze substitution possibilities:
  - Assess whether alternative tools can effectively replace traditional fiscal instruments in achieving policy objectives.
- Tailor analysis to development level:
  - Policy assessment should account for differences in how nontraditional tools operate across countries at different development stages.

### Publication and metadata
- Author: Vito Tanzi
- Date: October 1, 1995
- Series: Working Paper No. 1995/100
- Issue: 100
- Volume: 1995
- Pages: 22
- DOI: https://doi.org/10.5089/9781451852349.001
- Stock No: WPIEA1001995
- ISBN: 9781451852349
- ISSN: 1018-5941
- Subject: Central banks; Economic sectors; Expenditure; Foreign exchange; Public sector; Quasi-fiscal operations; Revenue administration
- Keywords: country; Eastern Europe; government; government failure; government goal; government objective; government role; minimalist state; Public sector; Quasi-fiscal operations; reform of the State; role of the government; WP

*Content based on "Government Role and the Efficiency of Policy Instruments", IMF Working Papers, Vito Tanzi, October 1, 1995.*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/government-role-and-the-efficiency-of-policy-instruments-1943_