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Long-term fiscal projections and their relationship with the intertemporal budget constraint: An application to New Zealand

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Author Info
John Janssen () (The Treasury)
Abstract

The fiscal gap calculates the change in fiscal policy settings needed to achieve a particular debt target at some point in the future. This working paper calculates fiscal gaps for New Zealand under a range of scenarios, including alternative spending growth, debt targets and interest rates. A positive (negative) fiscal gap indicates that a permanent increase (decrease) in the primary surplus is required to achieve a selected debt target in a particular terminal year. The scenarios suggest that under a range of alternative assumptions the fiscal gap out to 2051 is positive. These results are in accord with previous long-term fiscal projections, which, unlike the fiscal gap, have not been explicit about the nature of long-term fiscal imbalances. The analysis provides a platform for the further examination of potential long-term fiscal imbalances under a wider range of assumptions (e.g., around demographics, labour force participation, health spending) as well as alternative modelling techniques that allow for uncertainty.

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File URL: http://www.treasury.govt.nz/publications/research-policy/wp/2002/02-05/twp02-05.pdf
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Publisher Info
Paper provided by New Zealand Treasury in its series Treasury Working Paper Series with number 02/05.

Download reference. The following formats are available: HTML, plain text, BibTeX, RIS (EndNote), ReDIF
Length: 35 pages
Date of creation: Mar 2002
Date of revision:
Handle: RePEc:nzt:nztwps:02/05

Contact details of provider:
Postal: New Zealand Treasury, PO Box 3724, Wellington, New Zealand
Phone: +64-4-472 2733
Fax: +64-4-473 0982
Web page: http://www.treasury.govt.nz
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For technical questions regarding this item, or to correct its listing, contact: (Geraldine Bruin).

Related research
Keywords: Long-term fiscal imbalance intertemporal budget constraint

Find related papers by JEL classification:
E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
H60 - Public Economics - - National Budget, Deficit, and Debt - - - General

This paper has been announced in the following NEP Reports:

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