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A balance-sheet approach to fiscal sustainability

Author

Listed:
  • Eduardo Levi Yeyati

    (Universidad Torcuato Di Tella/The Brookings Institution)

  • Federico Sturzenegger

    (Universidad de San Andrés/Harvard Kennedy School)

Abstract

This paper proposes a new methodology to assess fiscal sustainability. Our approach relies on computing both government ´s assets and liabilities as opposed to focuting only on explicity liabilities. Assets are primarily the present discounted value of taxes, while liablities are primarily the present discounted value of expenditures in addition to explicit liabilities. By looking at the government ´s balance sheet we can compute the net worth of government, as well as evaluate it’s response to growth, commodity prices or real exchange rate shocks. We show that the implications for fiscal sustainability may be different from those obtained by focusing only on explicit liabilities as in the traditional approaches.

Suggested Citation

  • Eduardo Levi Yeyati & Federico Sturzenegger, 2021. "A balance-sheet approach to fiscal sustainability," Working Papers 55, Red Nacional de Investigadores en Economía (RedNIE).
    • Handle: RePEc:aoz:wpaper:55
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    Cited by:

    1. Pradhan, Krishanu, 2014. "Assessment of India's fiscal and external sector vulnerability: A balance sheet approach," Working Papers 327, Institute for Social and Economic Change, Bangalore.
    2. Krishanu Pradhan, 2018. "Assessment of India’s Fiscal and External Sector Vulnerability: A Balance Sheet Approach," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 12(3), pages 308-332, August.
    3. Eduardo Levy Yeyati, 2023. "Sovereign Debt Management," Working Papers 265, Red Nacional de Investigadores en Economía (RedNIE).
    4. Federico Sturzenegger, 2019. "Macri´s Macro: The meandering road to stability and growth," Working Papers 135, Universidad de San Andres, Departamento de Economia, revised Oct 2019.

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    More about this item

    JEL classification:

    • P43 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Finance; Public Finance
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems

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