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Structural Budget Balance

Author

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  • Virkola, Tuomo

Abstract

Euro Area member states have agreed to introduce a structural budget balance target to their national legislation (Treaty on Stability, Coordination and Governance). However, there exists no commonly agreed methodology to calculate this macroeconomic indicator. This report presents the conceptual framework underlying the calculation of structural fiscal balances as suggested by different international organizations such as the European Commission and the IMF. We emphasize that the methodology indeed affects both the quantitative estimates and the interpretation of the indicator for policy analysis. In addition we discuss some of the possible limitations of the indicator within real-time macroeconomic surveillance.

Suggested Citation

  • Virkola, Tuomo, 2013. "Structural Budget Balance," ETLA Reports 11, The Research Institute of the Finnish Economy.
    • Handle: RePEc:rif:report:11
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    File URL: http://www.etla.fi/wp-content/uploads/ETLA-Raportit-Reports-11.pdf
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    Cited by:

    1. Kuusi, Tero, 2018. "Does the structural budget balance guide fiscal policy pro-cyclically? Evidence from the Finnish Great Depression of the 1990s," MPRA Paper 84829, University Library of Munich, Germany.

    More about this item

    Keywords

    Cyclically-adjusted budget balance; Structural balance; Fiscal policy; Macroeconomic surveillance;
    All these keywords.

    JEL classification:

    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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