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Economic and policy determinants of public sector deficits

Author

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  • Marshall, Jorge
  • Schmidt-Hebbel, Klaus

Abstract

The purpose of this paper is to derive a framework for quantifying the contribution of the most important economic and policy variables to the public sector deficit. The method involves behavioral relations, identities for some key macroeconomic and sector variables and an accounting breakdown of the consolidated public sector deficit. This allows one to compare the direct effects of various foreign and domestic economic shocks on the deficit with those arising from changes in policy-controlled variables. The method is useful for decomposing historical time series of public deficits according to their main determinants - and for carrying out simulation or projection exercises for the level and structure of future deficits.

Suggested Citation

  • Marshall, Jorge & Schmidt-Hebbel, Klaus, 1989. "Economic and policy determinants of public sector deficits," Policy Research Working Paper Series 321, The World Bank.
    • Handle: RePEc:wbk:wbrwps:321
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    References listed on IDEAS

    as
    1. Khadr, Ali & Schmidt-Hebbel, Klaus, 1989. "A method for macroeconomic consistency in current and constant prices," Policy Research Working Paper Series 306, The World Bank.
    2. Easterly, William & Schmidt-Hebbel, Klaus, 1991. "The macroeconomics of public sector deficits : a synthesis," Policy Research Working Paper Series 775, The World Bank.
    3. Easterly, William, 1989. "A consistency framework for macroeconomic analysis," Policy Research Working Paper Series 234, The World Bank.
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    Cited by:

    1. Gustavo Garcia Osio & Rafael Rodriguez Balza & Luis Marcano & Ricardo Penfold & Gustavo Sanchez, 1998. "La sostenibilidad de la política fiscal en el América Latina: El caso de Venezuela," Research Department Publications 3016, Inter-American Development Bank, Research Department.
    2. Vavouras, Ioannis S., 1999. "Public Sector Deficits: Their Economic and Policy Determinants in the Case of Greece," Journal of Policy Modeling, Elsevier, vol. 21(1), pages 89-100, January.
    3. Islam, Roumeen & Wetzel, Deborah L., 1991. "The macroeconomics of public sector deficits : the case of Ghana," Policy Research Working Paper Series 672, The World Bank.

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