Quantitative approaches to fiscal sustainability analysis : a new World Bank tool applied to Turkey
AbstractFiscal sustainability analysis (FSA) is an important component of macroeconomic analysis. The authors review various quantitative approaches to FSA with a major objective to bring these approaches together and to present a user-friendly tool for FSA that reflects modern developments. They combine a dynamic simulations approach with a simplified version of the steady-state consistency approach. They also incorporate two different methods to deal with uncertainty: user-defined stress tests and stochastic simulations. The tool goes further by evaluating the required fiscal adjustment as a consequence of the stochastic realizations of the exogenous variables. Furthermore, the fiscal sustainability tool incorporates an endogenous debt feedback rule for the primary surplus, a fiscal policy reaction function. Besides outlining the theoretical framework, the authors also present a case study for Turkey.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 4169.
Date of creation: 01 Mar 2007
Date of revision:
Economic Theory&Research; External Debt; Economic Stabilization; Banks&Banking Reform; Public Sector Economics&Finance;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-03-17 (All new papers)
- NEP-BAN-2007-03-17 (Banking)
- NEP-CWA-2007-03-17 (Central & Western Asia)
- NEP-MAC-2007-03-17 (Macroeconomics)
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