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Strategies for Countries with Favourable Fiscal Positions

Listed author(s):
  • Robert W. R. Price


  • Isabelle Joumard


  • Christophe André


  • Makoto Minegishi


The financial crisis and economic downturn are going to weigh on fiscal positions in OECD countries over the short to medium-term, both through the operation of automatic stabilisers and the enactment of discretionary fiscal stimulus packages. However, the strategic policy options facing OECD countries are mainly determined by the soundness of their underlying fiscal positions which vary substantially. This paper first describes how OECD economies are situated with respect to underlying fiscal balances and net government debt. A number of countries seem to enjoy favourable fiscal positions with underlying fiscal surpluses, low government debt or even positive net financial asset positions. When taking account, as far as possible, of implicit liabilities associated with ageing populations and resource-based revenues, fiscal positions still vary greatly across countries. The paper then examines the criteria involved in deciding whether government financial asset accumulation is in excess of needs and the use to which any excess government saving might be put, whether increasing public spending or reducing taxes. Finally, the determinants of the optimal size of the government balance sheet for any given desired net debt position are discussed. Stratégies pour les pays bénéficiant de situations budgétaires favorables La crise financière et le ralentissement économique vont peser sur la situation budgétaire des pays de l’OCDE à court et moyen terme, à la fois à travers le jeu des stabilisateurs automatiques et la mise en oeuvre de politiques discrétionnaires de relance budgétaire. Toutefois, les options stratégiques dont disposent les pays de l’OCDE sont principalement déterminées par la solidité de leur situation budgétaire sous-jacente, très variable d’un pays à l’autre. Ce document commence par décrire la situation des économies de l’OCDE en termes de déficit sous-jacents et de dette nette des administrations publiques. Un certain nombre de pays semblent bénéficier d’une situation budgétaire favorable, avec des surplus sousjacents, une faible dette des administrations publiques, ou même une situation créditrice nette. Lorsque l’on prend en compte, dans la mesure du possible, les engagements implicites liés au vieillissement de la population et les revenus associés à l’exploitation de ressources naturelles, les situations budgétaires restent très variables selon les pays. Ce document examine ensuite les critères pertinents pour décider si l’accumulation d’actifs financiers par les administrations publiques est excessive par rapport aux besoins et quelles utilisations pourraient être faites d’une épargne excédentaire des administrations publiques, que ce soit pour accroître les dépenses publiques ou réduire les impôts. Il s’achève par une analyse des déterminants de la taille optimale du bilan des administrations publiques pour un niveau désiré de dette nette donné.

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Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 655.

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Date of creation: 17 Dec 2008
Handle: RePEc:oec:ecoaaa:655-en
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