Structural Balances and All That: Which Indicators to Use in Assessing Fiscal Policy
IMF Working Papers, June 1, 2002
Source details
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- Structural Balances and All That: Which Indicators to Use in Assessing Fiscal Policy
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Bibliographic details
- Authors: Nigel A Chalk
- Published: June 1, 2002
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451852523.001
Summary
- Structural indicators of a country's fiscal position are regularly used as estimates of both discretionary changes in fiscal policy and the effect of fiscal policy on aggregate demand.
- The paper evaluates, from a theoretical standpoint and from empirical case studies, the usefulness of structural indicators in measuring:
- the size of discretionary policy action, and
- fiscal demand stimulus.
- The paper discusses measurement problems relating to structural balances and the use of the fiscal impulse as an alternative to structural balances.
Major propositions examined
- Proposition 1:
- The change in the primary structural balance provides a better indicator of discretionary fiscal policy than does the change in the primary balance.
- Proposition 2:
- The change in the structural balance is a good indicator of the demand stimulus arising from changes in the fiscal position.
Topics and concepts covered
- Expenditure
- Fiscal policy
- Fiscal stance
- Macro-fiscal analysis
- Potential output
- Production
- Keywords reflected in the paper:
- aggregate demand
- budget constraint
- consumption good
- consumption-savings decision
- demand stimulus
- fiscal policy measure
- Fiscal stance
- fiscal stimulus
- impact of fiscal policy
- imperfect competition
- Macro-fiscal analysis
- policy stance
- potential GDP
- Potential output
- Structural balances
- weighted budget balance
- WP
Content in this bundle
- Structural Balances and All That: Which Indicators to Use in Assessing Fiscal Policy - WP/02/101