{
  "title": "A Model-based Fiscal Taylor Rule and a Toolkit to Assess the Fiscal Stance",
  "publication": "IMF Working Papers, February 14, 2020",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2020/02/14/a-model-based-fiscal-taylor-rule-and-a-toolkit-to-assess-the-fiscal-stance-49025",
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  "summary": "This paper presents a model-based fiscal Taylor rule and a toolkit to assess the fiscal stance, defined as the change in the structural primary balance.",
  "sections": [
    {
      "heading": "Key summary",
      "content": "- Presents a model-based fiscal Taylor rule and a toolkit to assess the fiscal stance, defined as the change in the structural primary balance.\n- Built on the normative buffer-stock model of the government (Fournier, 2019) which includes key channels like hysteresis, cycle-dependent multipliers and a risk premium.\n- A simple fiscal Taylor rule prescribes the fiscal stance as a function of past government debt, past output gap and the past structural primary balance.\n- Applications suggest several advanced economies could have better managed their fiscal stance over the last 20 years.\n- Simulations provide fiscal stance recommendations over the medium-term."
    },
    {
      "heading": "Model features and mechanisms",
      "content": "- Normative buffer-stock model of the government (Fournier, 2019).\n- Explicit inclusion of hysteresis.\n- Cycle-dependent multipliers.\n- A risk premium channel.\n- Fiscal stance operationalized as the change in the structural primary balance."
    },
    {
      "heading": "Fiscal Taylor rule specification",
      "content": "- Rule prescribes the fiscal stance as a function of:\n  - past government debt,\n  - past output gap,\n  - past structural primary balance."
    },
    {
      "heading": "Applications and empirical findings",
      "content": "- Applications to several advanced economies over the last 20 years indicate scope for improved fiscal stance management.\n- The toolkit enables assessment of historical fiscal stances and comparison with rule-implied recommendations."
    },
    {
      "heading": "Simulations and policy recommendations",
      "content": "- Simulations are used to provide fiscal stance recommendations over the medium-term.\n- Toolkit designed to translate model outputs into actionable fiscal stance guidance defined in terms of changes to the structural primary balance.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2020/02/14/a-model-based-fiscal-taylor-rule-and-a-toolkit-to-assess-the-fiscal-stance-49025"
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    "Authors: Jean-Marc Fournier, Philipp Lieberknecht",
    "Published: February 14, 2020",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781513529240.001",
    "Presents a model-based fiscal Taylor rule and a toolkit to assess the fiscal stance, defined as the change in the structural primary balance.",
    "Built on the normative buffer-stock model of the government (Fournier, 2019) which includes key channels like hysteresis, cycle-dependent multipliers and a risk premium.",
    "A simple fiscal Taylor rule prescribes the fiscal stance as a function of past government debt, past output gap and the past structural primary balance.",
    "Applications suggest several advanced economies could have better managed their fiscal stance over the last 20 years.",
    "Simulations provide fiscal stance recommendations over the medium-term.",
    "Normative buffer-stock model of the government (Fournier, 2019).",
    "Explicit inclusion of hysteresis.",
    "Cycle-dependent multipliers.",
    "A risk premium channel.",
    "Fiscal stance operationalized as the change in the structural primary balance.",
    "Rule prescribes the fiscal stance as a function of:",
    "Applications to several advanced economies over the last 20 years indicate scope for improved fiscal stance management.",
    "The toolkit enables assessment of historical fiscal stances and comparison with rule-implied recommendations.",
    "Simulations are used to provide fiscal stance recommendations over the medium-term.",
    "Toolkit designed to translate model outputs into actionable fiscal stance guidance defined in terms of changes to the structural primary balance.",
    "**Working Paper**"
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