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One-off and off-budget items: An alternative approach

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  • Gábor P. Kiss

    ()
    (Magyar Nemzeti Bank (central bank of Hungary))

Abstract

Fiscal analysis requires a set of indicators. For calculating the structural deficit, it is examined whether measures have permanent or temporary budgetary impacts, if any (creative accounting). For measuring fiscal impulse, it is examined when a given measure has a ‘true’ economic impact, if ever (creative accounting). For example, capital transfers to cover the losses of quasi-fiscal activities do not spread to the actual (‘true’) period of time by accrual recording. It is important to remove such illusory items from statistical expenditures and revenues, but in order to account for the ‘true’ effect, expenditures must be augmented, e.g. by quasi-fiscal losses and PPP investment. This type of analytical indicator has been employed by the central bank of Hungary for a decade. According to our experience, this ‘true’ measure is consistent in a macroeconomic sense and methodologically more robust than the statistical deficit, which often requires a subsequent upward revision. This kind of analytical methodology allows flexibility supported by expert judgement, and at the same time it requires transparency of methods and data.

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Bibliographic Info

Article provided by Magyar Nemzeti Bank (the central bank of Hungary) in its journal MNB Conference Volume.

Volume (Year): 1 (2007)
Issue (Month): 1 (December)
Pages: 18-27

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Handle: RePEc:mnb:confer:v:1:y:2007:i:1:p:18-27

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Keywords: creative accounting; quasi-fiscal activities; private-public-partnership.;

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Cited by:
  1. Dubravko Mihaljek, 2007. "Fiscal transparency from central banks’ perspective: off-budget activities and government asset funds," MNB Conference Volume, Magyar Nemzeti Bank (the central bank of Hungary), vol. 1(1), pages 9-17, December.
  2. Gábor P. Kiss, 2011. "Moving target indication: Fiscal indicators employed by the Magyar Nemzeti Bank," MNB Occasional Papers 2011/92, Magyar Nemzeti Bank (the central bank of Hungary).
  3. Daniele Franco (editor), 2012. "Rules and institutions for sound fiscal policy after the crisis," Workshop and Conferences 11, Bank of Italy, Economic Research and International Relations Area.

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