Real-Time Macro Monitoring and Fiscal Policy

This paper considers the effects of inaccurate real-time output data on fiscal management, both with respect to budgetary planning and fiscal surveillance. As newer and better information becomes available, output data available in real time get revised and are likely to conflict with final figures that are only released some years later. Nevertheless, fiscal policy needs to be inevitably based on real-time figures. The paper develops a simple modeling framework to formalize these linkages and combines it with a newly compiled dataset from the International Monetary Fund's World Economic Outlook, comprising final and real-time output data for 175 countries, over a period of 17 years. We simulate the effects of output revisions on revisions of the overall balance, the structural balance and debt accumulation. It finds that output revisions may have substantial effects on the ability of governments to correctly estimate the overall balance and the structural fiscal balance in real time, and that the effects may imply substantial debt accumulation.

Bibliographic Details

Main Authors:	Ley, Eduardo, Misch, Florian
Language:	English en_US
Published:	World Bank, Washington, DC 2013-01
Subjects:	ACCOUNTING, ACCRUAL ACCOUNTING, ACCUMULATION OF DEBT, ADVANCED COUNTRIES, CHECKS, CONTINGENCY PLANS, DATA ANALYSIS, DEBT, DEBT ACCUMULATION, DEBT CRISES, DEBT REDUCTION, DEBT REDUCTIONS, DEFICITS, DEVELOPING COUNTRIES, DEVELOPMENT ECONOMICS, DEVELOPMENT POLICY, ECONOMIC ACTIVITY, ECONOMIC FLUCTUATIONS, ECONOMIC FORECASTS, ECONOMIC OUTLOOK, ECONOMIC RESEARCH, ELASTICITY, EURO, EXPENDITURE, EXPENDITURES, EXPORTERS, FACE VALUE, FEDERAL RESERVE, FEDERAL RESERVE BANK, FINANCIAL CRISIS, FINANCIAL SUPPORT, FISCAL MANAGEMENT, FISCAL PLANNING, FISCAL POLICY, FISCAL SUSTAINABILITY, FORECASTS, FUTURE RESEARCH, GDP, GOVERNMENT DEBT, GOVERNMENT EXPENDITURE, GROWTH PROJECTIONS, GROWTH RATE, GROWTH RATES, INCOME, INCOME GROUP, INCOME GROUPS, INCOMES, INFLATION, INSTRUMENT, INTERNATIONAL BANK, LEVEL OF DEBT, LOW-INCOME COUNTRIES, MACROECONOMIC VARIABLES, MIDDLE INCOME COUNTRIES, MIDDLE-INCOME COUNTRIES, MIDDLE-INCOME ECONOMIES, MODELING, MONETARY FUND, MONETARY POLICY, MULTIPLIERS, NATIONAL BANK, NATURAL DISASTERS, NATURAL RESOURCES, OUTPUT, OUTPUT GAP, OUTPUT GAPS, POLITICAL CONSIDERATIONS, POLITICAL ECONOMY, POTENTIAL OUTPUT, PUBLIC DEBT, PUBLIC FINANCE, PUBLIC FINANCES, PUBLIC SPENDING, RELIABILITY, RESEARCH WORKING PAPERS, SCENARIO, SIMULATION, SIMULATIONS, TAX, TRACK RECORD, UNEMPLOYMENT,
Online Access:	http://documents.worldbank.org/curated/en/2013/01/17150429/real-time-macro-monitoring-fiscal-policy https://hdl.handle.net/10986/12194
Tags:	Add Tag No Tags, Be the first to tag this record!