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Accounting for One-off Operations when Assessing Underlying Fiscal Positions

Author

Listed:
  • Isabelle Joumard

    (OECD)

  • Makoto Minegishi

    (OECD)

  • Christophe André

    (OECD)

  • Chantal Nicq

    (OECD)

  • Robert W. R. Price

    (OECD)

Abstract

Frequent recourse to large one-off operations in a number of OECD countries has undermined the accuracy of cyclically adjusted fiscal balances as a measure of both the sustainability of public finance and the fiscal stance. This paper first provides detailed information on the nature and amount of these one-offs for 9 OECD countries. The paper then presents a new indicator – the “underlying” fiscal balance – which effectively eliminates the impact of one-offs and cyclical developments. One-offs are derived as the deviations from trend in net capital transfers, i.e. from widely available national account data. This approach provides a consistent treatment of one-offs both across countries and over time, avoiding the potential information biases which could result from an individual identification of one-offs. Évaluer les positions budgétaires sous-jacentes en présence de mesures ponctuelles Le recours fréquent à des mesures ponctuelles dans certains pays de l’OCDE a rendu caduque l’utilisation du solde budgétaire corrigé des variations cycliques pour évaluer tant la soutenabilité des finances publiques que l’impact des politiques budgétaires discrétionnaires sur l’activité économique. Ce document présente des informations détaillées sur la nature et le montant de ces mesures ponctuelles pour 9 pays de l’OCDE. Il propose ensuite un nouvel indicateur – le solde budgétaire sous-jacent – qui corrige le solde budgétaire des effets des mesures ponctuelles et du cycle économique. Les mesures ponctuelles sont assimilées aux écarts à la tendance des transferts en capitaux, séries facilement disponibles dans les comptes nationaux. Cette approche assure un traitement symétrique tant entre les pays qu’au cours du temps, évitant ainsi les biais potentiels qui découleraient d’une identification individuelle des mesures ponctuelles.

Suggested Citation

  • Isabelle Joumard & Makoto Minegishi & Christophe André & Chantal Nicq & Robert W. R. Price, 2008. "Accounting for One-off Operations when Assessing Underlying Fiscal Positions," OECD Economics Department Working Papers 642, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:642-en
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    File URL: http://dx.doi.org/10.1787/236220765316
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    Cited by:

    1. David Lodge & Marta Rodriguez-Vives, 2013. "How long can austerity persist? The factors that sustain fiscal consolidations," European Journal of Government and Economics, Europa Grande, vol. 2(1), pages 5-24, June.
    2. Plödt, Martin & Reicher, Claire A., 2015. "Estimating fiscal policy reaction functions: The role of model specification," Journal of Macroeconomics, Elsevier, vol. 46(C), pages 113-128.
    3. Paweł Borys & Piotr Ciżkowicz & Andrzej Rzońca, 2014. "Panel Data Evidence on the Effects of Fiscal Policy Shocks in the EU New Member States," Fiscal Studies, Institute for Fiscal Studies, vol. 35, pages 189-224, June.
    4. Debra Bloch & Jean-Marc Fournier & Duarte Gonçalves & Álvaro Pina, 2016. "Trends in Public Finance: Insights from a New Detailed Dataset," OECD Economics Department Working Papers 1345, OECD Publishing.
    5. Marco Bassetto & R. Andrew Butters, 2010. "What is the relationship between large deficits and inflation in industrialized countries?," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q III, pages 83-100.
    6. Klaus Vondra, 2013. "Austria Withstands Recession: Return to Positive Growth in Early 2013," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 6-11.
    7. Breuer, Christian, 2013. "On the Identification and Macroeconomic Effects of Discretionary Changes in Fiscal Policy," MPRA Paper 52056, University Library of Munich, Germany, revised 22 Nov 2013.
    8. Jef Vuchelen & Jesse De Wit, 2008. "An Evaluation of the OECD Cyclically-Adjusted Primary Government Balance Forecasts," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 51(4), pages 459-479.

    More about this item

    Keywords

    cyclically-adjusted budget balance; fiscal balances; solde budgétaire; solde budgétaire corrigé des variations cycliques;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General

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