Indicators of Fiscal Sustainability
January 1, 1991
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Summary
This paper assesses the usefulness of summary measures of fiscal sustainability for the purpose of multilateral surveillance. An overview of the main conceptual issues is first presented. Next, an assessment is made of the strengths and weaknesses of the summary measures in the context of their recent application to industrial countries by the OECD and the Fund. The measures are shown to highlight the inadequacy of using trends in public debt ratios to assess sustainability. However, the measures and their recent application are subject to a number of caveats, in particular in relation to their sensitivity to the discount rate, time paths of government expenditures and private sector behavior.
Subject: Expenditure, Financial services, Fiscal policy, Fiscal sustainability, Public debt, Real interest rates
Keywords: budget constraint, debt repudiation, debt stabilization, fiscal policy sustainability, Fiscal sustainability, GDP, Global, government solvency, present discounted value, public debt-to-GDP ratio, Real interest rates, stock ratio, WP
Pages:
34
Volume:
1991
DOI:
Issue:
005
Series:
Working Paper No. 1991/005
Stock No:
WPIEA0051991
ISBN:
9781451842081
ISSN:
1018-5941
