Stock-Flow Adjustments and Fiscal Transparency: A Cross-Country Comparison

19 Pages Posted: 28 Feb 2012

See all articles by Anke Weber

Anke Weber

International Monetary Fund (IMF)

Date Written: January 2012

Abstract

Over the past three decades, large and persistent discrepancies between the annual change in public debt and the budget deficit, so-called stock-flow adjustments, were a prominent feature of debt dynamics in many economies. The aim of this paper is to investigate the underlying determinants of such discrepancies and their relationship with fiscal transparency using data for 163 countries. Results show that such discrepancies can only be partly explained by balance sheet effects and the realization of contingent liabilities and that significant differences exist in average stock-flow adjustments across countries reflecting country-specific factors. The more fiscally transparent the country, the smaller these tend to be. The contribution of stock-flow adjustments to increases in debt is likewise smaller in countries with above average fiscal transparency. This may not be coincidental, as a lack of fiscal transparency may make it easier for governments to engage in deceptive fiscal stratagems.

Keywords: Public Debt, Budget Deficits, Fiscal Transparency, Fiscal Analysis

JEL Classification: H60, H63, F34

Suggested Citation

Weber, Anke, Stock-Flow Adjustments and Fiscal Transparency: A Cross-Country Comparison (January 2012). IMF Working Paper No. NO.12/39, Available at SSRN: https://ssrn.com/abstract=2012224

Anke Weber (Contact Author)

International Monetary Fund (IMF) ( email )

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