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Theoretical foundations, properties and interpretation of the budget gap indicators

Listed author(s):
  • Goryunov, Yevgeniy

    ()

    (Gaidar Institute for Economic Policy)

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    Analysis of the sustainability of public finances requires the use of quantitative indicators by which to assess the possible risks of the budget crisis. The article deals with a special class of such indicators - indicators of the budget gap. Budget gap reflects the long-term budgetary imbalances, and a methodology for assessing fiscal sustainability with the use of this index is based on a comparison of the sum of the current size of the debt and the present value of expected future budget expenditure on the one hand, and the present value of future revenues - on the other. The article gives a theoretical justification of the budget gap as an indicator of fiscal sustainability, we discuss some of its properties, and especially the interpretation of its values. An illustrative example based on calculations carried out for the Russian budget.

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    File URL: ftp://w82.ranepa.ru/rnp/ecopol/ep1623.pdf
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    Article provided by Russian Presidential Academy of National Economy and Public Administration in its journal Economic Policy.

    Volume (Year): 2 (2016)
    Issue (Month): (April)
    Pages: 112-132

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    Handle: RePEc:rnp:ecopol:ep1623
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