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Understanding Fiscal Space

  • Peter S. Heller

With new initiatives to provide low income countries with external assistance in support of the Millennium Development Goals (MDGs), donors and NGOs are seeking to understand whether "fiscal space" can be provided in the context of IMF-supported programs to support these initiatives. This paper defines the concept of fiscal space and its link to fiscal sustainability, describes alternative ways in which fiscal space can be created, and notes how the IMF can support appropriate efforts to create fiscal space. The paper underscores that the issues that arise in creating fiscal space are not novel, but have always confronted governments in judging whether there is scope for additional expenditure.

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Paper provided by International Monetary Fund in its series IMF Policy Discussion Papers with number 05/4.

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Length: 19
Date of creation: 01 Mar 2005
Date of revision:
Handle: RePEc:imf:imfpdp:05/4
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  1. Fischer, Stanley, 1993. "The role of macroeconomic factors in growth," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 485-512, December.
  2. César Calderón & Luis Servén, 2005. "The Effects of Infrastructure Development on Growth and Income Distribution," DEGIT Conference Papers c010_056, DEGIT, Dynamics, Economic Growth, and International Trade.
  3. A. Senhadji Semlali & Mohsin S. Khan, 2000. "Threshold Effects in the Relationship Between Inflation and Growth," IMF Working Papers 00/110, International Monetary Fund.
  4. Nigel Andrew Chalk & Richard Hemming, 2000. "Assessing Fiscal Sustainability in Theory and Practice," IMF Working Papers 00/81, International Monetary Fund.
  5. Marianne Fay & Danny Leipziger & Quentin Wodon & Tito Yepes, 2003. "Achieving the Millennium Development Goals : The role of infrastructure," Policy Research Working Paper Series 3163, The World Bank.
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