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A New Method for Constructing a Cyclically Adjusted Budget Balance: the Case of Sweden

Author

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  • Braconier, Henrik

    (National Institute of Economic Research)

  • Forsfält, Tomas

    (National Institute of Economic Research)

Abstract

In this paper, we discuss a new method for constructing a cyclically adjusted budget balance. We use the method to evaluate the budget balance for Sweden during the period 1991–2005. Traditionally, methods for cyclical adjustment have focused on the output gap. In this paper we also adjust for deviations of tax bases from their trend levels. Furthermore, we adjust for effects of the unemployment gap on government spending. For Sweden, we find that these additional adjustments have a significant impact on the cyclically adjusted budget balance, especially for the periods 1992–1995 and 2000–2001.

Suggested Citation

  • Braconier, Henrik & Forsfält, Tomas, 2004. "A New Method for Constructing a Cyclically Adjusted Budget Balance: the Case of Sweden," Working Papers 90, National Institute of Economic Research.
    • Handle: RePEc:hhs:nierwp:0090
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    References listed on IDEAS

    as
    1. Braconier, Henrik & Holden, Steinar, 1999. "The Public Budget Balance - Fiscal Indicators and Cyclical Sensitivity in the Nordic Countries," Working Papers 67, National Institute of Economic Research.
    2. Rodseth, Asbjorn, 1984. "Progressive taxes and automatic stabilization in an open economy," Journal of Macroeconomics, Elsevier, vol. 6(3), pages 265-282.
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    Cited by:

    1. López-Cálix, José R. & Melo, Alberto & Tinsley, Elaine & Calvo, Sara, 2005. "Creating Fiscal Space for Poverty Reduction in Ecuador: A Fiscal Management and Public Expenditure Review," IDB Publications (Books), Inter-American Development Bank, number 371, March.
    2. Martin Larch & João Nogueira Martins, 2007. "Fiscal indicators - Proceedings of the the Directorate-General for Economic and Financial Affairs Workshop held on 22 September 2006 in Brussels," European Economy - Economic Papers 2008 - 2015 297, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    3. Christopher Loewald & David Faulkner & Konstantin Makrelov, 2020. "Time consistency and economic growth a case study of south african macroeconomic policy," Working Papers 10421, South African Reserve Bank.
    4. José R. López-Cálix & Alberto Melo & Elaine Tinsley & Sara Calvo, 2005. "Creating Fiscal Space for Poverty Reduction in Ecuador: A Fiscal Management and Public Expenditure Review," IDB Publications (Books), Inter-American Development Bank, number 60858, February.
    5. World Bank, 2004. "Ecuador - Creating Fiscal Space for Poverty Reduction : A Fiscal Management and Public Expenditure Review, Volume 1. Main Report," World Bank Publications - Reports 14515, The World Bank Group.
    6. World Bank, 2005. "Creating Fiscal Space for Poverty Reduction in Ecuador : A Fiscal Management and Public - Expenditure Review," World Bank Publications - Books, The World Bank Group, number 7296, December.

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    More about this item

    Keywords

    Fiscal Policy; Cyclically Adjusted Budget Balance;

    JEL classification:

    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems

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