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Accounting for One-off Operations when Assessing Underlying Fiscal Positions

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Author Info

  • Isabelle Joumard
  • Makoto Minegishi
  • Christophe André
  • Chantal Nicq
  • Robert W.R. Price

Abstract

Frequent recourse to large one-off operations in a number of OECD countries has undermined the accuracy of cyclically adjusted fiscal balances as a measure of both the sustainability of public finance and the fiscal stance. This paper first provides detailed information on the nature and amount of these one-offs for 9 OECD countries. The paper then presents a new indicator – the “underlying” fiscal balance – which effectively eliminates the impact of one-offs and cyclical developments. One-offs are derived as the deviations from trend in net capital transfers, i.e. from widely available national account data. This approach provides a consistent treatment of one-offs both across countries and over time, avoiding the potential information biases which could result from an individual identification of one-offs. Évaluer les positions budgétaires sous-jacentes en présence de mesures ponctuelles Le recours fréquent à des mesures ponctuelles dans certains pays de l’OCDE a rendu caduque l’utilisation du solde budgétaire corrigé des variations cycliques pour évaluer tant la soutenabilité des finances publiques que l’impact des politiques budgétaires discrétionnaires sur l’activité économique. Ce document présente des informations détaillées sur la nature et le montant de ces mesures ponctuelles pour 9 pays de l’OCDE. Il propose ensuite un nouvel indicateur – le solde budgétaire sous-jacent – qui corrige le solde budgétaire des effets des mesures ponctuelles et du cycle économique. Les mesures ponctuelles sont assimilées aux écarts à la tendance des transferts en capitaux, séries facilement disponibles dans les comptes nationaux. Cette approche assure un traitement symétrique tant entre les pays qu’au cours du temps, évitant ainsi les biais potentiels qui découleraient d’une identification individuelle des mesures ponctuelles.

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Bibliographic Info

Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 642.

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Date of creation: 30 Sep 2008
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Handle: RePEc:oec:ecoaaa:642-en

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Keywords: fiscal balances; cyclically-adjusted budget balance; solde budgétaire corrigé des variations cycliques; solde budgétaire;

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Cited by:
  1. Borys, Paweł & Ciżkowicz, Piotr & Rzońca, Andrzej, 2013. "Panel data evidence on effects of fiscal impulses in the EU New Member States," MPRA Paper 48243, University Library of Munich, Germany.
  2. Marco Bassetto & R. Andrew Butters, 2010. "What is the relationship between large deficits and inflation in industrialized countries?," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q III, pages 83-100.
  3. David Lodge & Marta Rodriguez-Vives, 2013. "How long can austerity persist? The factors that sustain fiscal consolidations," European Journal of Government and Economics, Europa Grande, vol. 2(1), pages 5-24, June.
  4. Jef Vuchelen & Jesse De Wit, 2008. "An Evaluation of the OECD Cyclically-Adjusted Primary Government Balance Forecasts," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 51(4), pages 459-479.
  5. Breuer, Christian, 2013. "On the Identification and Macroeconomic Effects of Discretionary Changes in Fiscal Policy," MPRA Paper 52056, University Library of Munich, Germany, revised 22 Nov 2013.
  6. Klaus Vondra, 2013. "Austria Withstands Recession: Return to Positive Growth in Early 2013," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 6–11.
  7. Borys, Paweł & Ciżkowicz, Piotr & Rzońca, Andrzej, 2011. "Panel data evidence on non-Keynesian efects of fiscal policy in the EU New Member," MPRA Paper 32696, University Library of Munich, Germany.

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