How Small Should an Economy's Fiscal Deficit Be? A Monetary Programming Approach
The author describes a spread-sheet
planning model to help determine the government deficit
consistent with a policymaker's "vector" of
principal macroeconomic objectives (including real GDP
growth, inflation, exchange rate, and international reserve
accumulation). The model focuses on the monetary accounts,
applying balance-of-payments forecasts formulated
separately, but based on the same macroeconomic objectives.
The model is a consistency exercise, intended as part of a
broader consistency exercise for a given macro-economy. It
offers one more perspective on the question of how large a
government deficit should be - a perspective that can be
used in conjunction with others. For each forecast period,
the model determines consistent period-end and
period-average stocks for the economy's outstanding
central bank assets, and liabilities and, government
obligations. I applies forecasting assumptions about
interest rates to forecast central bank profit-and-loss
flows, and takes account of these in determining the overall
flow of resources that would be available to finance the
government deficit. An annex describes a (purely
illustrative) simulation carried out during 1999 for Ecuador.
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Bibliographic Details
| Main Author: |
Beckerman, Paul |
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| Language: | English
en_US |
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| Published: |
World Bank, Washington, DC
2000-03
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| Subjects: | ACCRUED INTEREST,
ASSETS,
BANK LENDING,
BANK LOANS,
BASE YEAR,
BONDS,
CENTRAL BANK,
COMMERCIAL BANKS,
DEBT,
DEMAND FOR MONEY,
DEVELOPING ECONOMIES,
DOMESTIC PRICE,
DOMESTIC PRICE LEVEL,
ECONOMIC PERFORMANCE,
ECONOMISTS,
ELASTICITIES,
ELASTICITY,
ELASTICITY OF DEMAND,
EXCHANGE RATE,
EXCHANGE VALUE,
EXTERNAL BORROWING,
EXTERNAL DEBT,
EXTERNAL FINANCING,
FINANCIAL INSTITUTIONS,
FINANCIAL MARKETS,
FINANCIAL SYSTEM,
FISCAL ADJUSTMENT,
FISCAL DEFICIT,
FISCAL POLICY,
FORECASTS,
FOREIGN CURRENCY,
FOREIGN EXCHANGE,
GOVERNMENT DEBT,
GROSS DOMESTIC PRODUCT,
GROWTH RATE,
GROWTH RATES,
IMPORTS,
INFLATION,
INFLATION RATE,
INTEREST RATE,
INTEREST RATES,
INTERNATIONAL MONETARY FUND,
INTERNATIONAL RESERVES,
LIQUIDITY,
MACROECONOMIC FRAMEWORK,
MACROECONOMIC OBJECTIVES,
MACROECONOMIC POLICY,
MONETARY AUTHORITY,
MONETARY EXPANSION,
MONEY DEMAND,
MONEY MULTIPLIER,
MONEY SUPPLY,
NET WORTH,
NOMINAL INTEREST RATE,
NOMINAL INTEREST RATES,
OUTPUT GROWTH,
POLICY ANALYSIS,
POLICY INSTRUMENTS,
POLICY RESEARCH,
POVERTY REDUCTION,
PUBLIC DEFICIT,
PUBLIC SECTOR,
REAL GDP,
REAL INTEREST,
REAL INTEREST RATE,
REAL INTEREST RATES,
REAL OUTPUT,
REAL TERMS,
RESERVE,
TAX REVENUE, |
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| Online Access: | http://documents.worldbank.org/curated/en/2000/03/437906/small-economys-fiscal-deficit-monetary-programming-approach
https://hdl.handle.net/10986/18855
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