Fiscal Indicators in a Rule-Based Framework
34 Pages Posted: 15 Feb 2012
Date Written: March 30, 2006
Abstract
Boije and Fischer examine the role of fiscal indicators in the Swedish rules based budgetary framework, which requires that the general government budget position show a surplus of 2 per cent of GDP over the cycle. They consider the indicators developed by different institutions for measuring the fiscal stance, the structural budget balance and the discretionary component of budget changes. They also discuss the factors underlying ex post revisions of fiscal indicators. On the basis of the Swedish experience they draw some general conclusions. They note that methodological differences can lead to substantially different results. This can be problematic when indicators are used to assess policy objectives, such as the fulfillment of the Swedish surplus target, and when the assessments lead to short term policy conclusions. A second lesson concerns the implications of the short-term volatility of public finance figures. Boije and Fischer notice that the magnitude of this uncertainty overshadows any improvements in precision that can be achieved by making more refined methodological changes to budget indicators and that it appears more important to concentrate on how to improve national accounts statistics and forecasting.
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