https://www.econstor.eu/bitstream/10419/75127/1/687786401.pdf

Quantitative aspects of federalism: A study of six countries

Two recent criticisms of summary fiscal indicators are appraised: first, that they and the conventionally-measured public sector balances from which they are derived are not sufficiently broadly defined; second, that they are meaningless because they do not reflect changes in the distribution of wealth among generations. The paper concludes that the defects of summary fiscal indicators have been exaggerated. It is not feasible to include all changes in public sector net worth in the deficit, and the existence of liquidity constraints and aversion to indebtedness imply that conventionally-measured public sector deficits are not irrelevant.

Are All Summary Indicators of the Stance of Fiscal Policy Misleading

This paper traces the evolution of the concept of the cyclically adjusted budget from the 1930s to the present. The idea of balancing the budget over the cycle was first conceived in Sweden in the 1930s by the economists of the Stockholm School and was soon reinterpreted and incorporated into the fiscal program of the American political coalition supporting the New Deal, especially by the Committee for Economic Development during and after World War II. In the 1960s, Keynesian economists associated with the Kennedy and Johnson administrations reformulated the notion. Despite their claims at the time, their version differed only in degree from the earlier CED approach, the transformation being largely conditioned by changing political circumstances. In the 1980s, however, the concept changed substantially. Methods for calculating it transformed dramatically, as the notion became a device to limit and direct

/pdf/the-cyclically-adjusted-budget-history-and-exegesis-of-a-26mthruwxz.pdf

The Cyclically Adjusted Budget: History and Exegesis of a Fateful Estimate

The Russian economy continues to grow strongly, buoyed by rising terms of trade, which, in turn, are
supporting a boom in domestic consumption. This paper addresses the challenge that the adjustment to
sustained high oil prices poses for macroeconomic management. It first examines the impact of rising
terms of trade on the domestic economy, particularly with respect to exchange-rate appreciation,
competitiveness and inflation. It then considers the role of monetary and fiscal policies in ensuring a
smooth adjustment to the higher terms of trade. The paper argues that fiscal policy should be the primary
instrument for tackling this challenge. It therefore focuses on the potential role of a fiscal rule in insulating
the economy and the budget from commodity-price fluctuations, and on the management of windfall oil
and gas revenues accumulated in the fiscal Stabilisation Fund.

/pdf/a-golden-rule-for-russia-how-a-rule-based-fiscal-policy-can-8lqi78smks.pdf

A Golden Rule for Russia? How a Rule-Based Fiscal Policy Can Allow a Smooth Adjustment to the New Terms of Trade

The aim of this paper is to provide an assessment of the medium-term financial strategies operating in and available to OECD economies. Three issues are discussed: first, the rationale for the increasing adoption of medium-term budgetary and monetary objectives; second, the appropriate criteria for the determination of medium-term policy norms, and the institutional means through which these are implemented; and third, the problems of ensuring consistency between short-term policies and medium-term goals. Underlying these issues is the theme of monetary and fiscal policy co-ordination and the medium-term effectiveness of demand management. To the extent that central banks can contain the pressures stemming from the mix of restrictive monetary targets and expansionary budgets, monetary and fiscal policies might be assigned to different objectives - inflation control and short-term employment support respectively (although monetary restraint would not free expansionary fiscal action ...

Medium-term financial strategy

PpT HE purpose of this paper is to appraise the cyclical performance of fiscal policy over two recent cycles ranging from 1957-3 (peak) to 1960-2 (peak), and from 1960-2 to the first quarter of 1963. Also, an attempt is made to appraise the full employment adequacy of fiscal policy over this period. The exercise shows that grading, as always, is a delicate matter and that the results will differ depending on what formula is used. The effectiveness of fiscal policy is not easily measured. Obviously, it cannot be demonstrated by searching for a simple association between budget deficit and prosperity, nor can its ineffectiveness be proven by showing deficits to be associated with declines in GNP.1 What matters, first of all, are changes in budgetary position relative to changes in GNP. Moreover, a distinction must be drawn between the built-in effects of changes in GNP on changes in fiscal position, and the effects of discretionary changes in fiscal parameters on GNP. The former relation, which dominates the picture of the last decade, leads to the observed positive association between change in GNP and the level of budget surplus. This association in no way disproves the proposition that the built-in increase in deficit dampens the decline in GNP, just as the built-in increase in surplus dampens the rise. The effects of discretionary changes in fiscal parameters, in turn, should lead to a negative relation between changes in GNP and budget surplus, but this relationship involves lags and is not easily read from the data. Ultimately, the only satisfactory way of measuring the effects of budget policy on GNP during a past period is in terms of an econometric model which isolates fiscal factors. No such attempt will be made here. Rather, we shall compute various overall indices of fiscal performance, based on a more or less simplified multiplier model of fiscal policy effects, and address ourselves to certain conceptual problems which they pose. Our concern will be first with the contribution of fiscal policy to cylical stability, and then with measures of its full employment adequacy.

R. A. Musgrave

Papers

On Measuring Fiscal Performance