What Are Fiscal Rules In A Volatile World

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Fiscal Rules for Commodity Exporters: Prudence and Procyclicality

Fiscal Rules for Commodity Exporters: Prudence and Procyclicality Carlos J. Garcia, Jorge E. Restrepo, and Evan Tanner 1 Abstract This paper compares welfare levels under alternative fiscal rules for small open, commodity exporter, economies who se fiscal income varies with the world commodity price (in a

Oil and Gas Tax Guide for the Middle East 2015 - PwC

The oil and gas industry is currently extremely volatile and companies operating in this sector often require significant advice regarding tax liabilities and fiscal requirements. With regulatory authorities constantly changing the tax landscape, it is essential any

Analysis and measurement of the relationship between money

between money supply and the rules of fiscal policy in the Iraqi economy, covering data for the period (2004: 3-2015: 2). The research revealed that


States finds itself in an increasingly volatile world where the lines between traditional conflict, terrorism, and the use of unconventional means and weapons (such as cyberattacks) are blurred. This poses a significant threat to the United States and its allies. The U.S. Intelligence Community and the National

What Determines the Adoption of Fiscal Rules in Resource-Rich

Effective and well-designed fiscal rules are especially important for resource-rich countries, which often face large economic shocks coming from volatile commodity prices and inherent uncertainty in the extraction of natural resources. Having proper fiscal rules and (counter-cyclical) policies in place can help

ECONOMIC POLICY Contingent liabilities-a threat to fiscal

Fiscal risks and uncertainties are increas- Explicit liabilities are specific government ing for four main reasons. Private capital obligations definedbylawor contract. The incorplete if it flows are increasing and becoming more government is legally mandated to settle volatile.

Trust Funds and Fiscal Risksin the North Pacific

Drawdown Rules 16 8 Modeling of the Marshall Islands Compact Trust Fund Drawdown Rules, Alternatives 1 and 2 18 9 Modeling of the Marshall Islands Compact Trust Fund Drawdown Rules, Alternatives 3 and 4 21 10 Modeling of the Federated States of Micronesia s Compact Trust Fund s Current Drawdown Rules 31

Fiscal Discipline, Volatility and Growth

a. Volatile fiscal policy. Changes in fiscal policy have an effect on macroeconomic outcomes and, as a result, bring undesirable volatility to the economy. We focus on a narrow definition of discretionary fiscal policy, which identifies changes in fiscal variables that are unrelated to economic conditions. These changes cannot be attributed to

Working Paper no. 307 - Bank of England

Fiscal rules for debt sustainability in emerging markets: the impact of volatility and default risk Adrian Penalver∗ and Gregory Thwaites Working Paper no. 307 ∗ Corresponding author. Bank of England, Threadneedle Street, London EC2R 8AH. Telephone: +44 (0)20 7601 3303. Fax: +44 (0)20 7601 3804. Email: [email protected]

Budget Rules and Resource Booms - World Bank

openness to international trade (Arezki and van der Ploeg, 2012), (iii) countercyclical fiscal rules in the face of volatile mineral revenue (Frankel 2012 and Schmidt-Hebbel, 2012), and (iv) micro instruments or conditional cash transfers such as Progresa and Bolsa Familia in Mexico and

Chapter 7 Chile s New Fiscal Rule - Duke University

fiscal rule is not a necessary condition for successful fiscal consolidation within OECD countries. Bayoumi and Eichengreen (1995) and Levinson (1998) show for the US that fiscal rules decrease the ability of governments to use fiscal policy to smooth the business cycle and therefore can lead to a significant increase in output volatility.

How to Cope with Volatile Commodity Export Prices: Four Proposals

World Bank might be able to make the market: It would lend to interested oil-producing countries which is its job in terms of oil in place of lending to them in dollars. It would then offset its collective exposure to oil market conditions by selling to investors a World Bank bond denominated in a standard oil price index.

Fiscal Management in Resource-Rich Countries

Oct 08, 2017 This second volume, Fiscal Management in Resource-Rich Countries, addresses the critical challenges that volatile, uncertain, and exhaustible revenues from the EI sector pose to fi scal policies in these countries.

Fiscal and Monetary Institutions in Central, Eastern and

Fiscal institutions and macroeconomic stability: Countries with better fiscal frameworks are presumably following counter-cyclical fiscal policy. Letting automatic stabilisers run and implementing counter-cyclical discretionary fiscal policy through the business cycle can dampen macroeconomic volatility.

How Did Fiscal Rules Hold Up in the Commodity Price Crash?

fiscal rules since the 1980s but following increased interest in them by academics and policy experts their adoption across the globe has surged in the last two decades. 7 A fiscal rule, if appropriately designed and implemented, may help overcome three

Economic Stabilization in the Post-Crisis World: Are Fiscal

This paper evaluates fiscal rules and evaluates their effectiveness in reducing procyclical fiscal policies. By investigating the effectiveness of fiscal rules, our work is a natural complement to the large body of literature on monetary rules. Our work extends previous work on fiscal rules in two main dimensions.

Budget rules and resource booms: A dynamic stochastic general

the presence of export price uncertainty the economic implications of budget rules associated with public revenue from natural resources in a developing country. We ask how budget rules should be set in the countries that are facing high spending pressures for social needs in the context of highly volatile mineral revenue.

No. IDB-DP-294 A Structural Fiscal Balance Rule for Mexico

proposed is known as a structural fiscal balance rule, which is a mechanism that separates the truly structural components of the budget from those that are temporary, allowing the adoption of fiscal rules and behavior criteria that do not depend on the economic cycle or other temporary factors.

Oil Exporters: Policies and Challenges

Fiscal reforms also remain necessary in a majority of oil-exporting EMDEs. Only one-fourth of oil-export-ing EMDEs have fiscal rules to smooth the impact of oil price cycles on activity and public finances. This suggests the need for stronger fiscal frameworks to help reduce procyclicality and to establish a firmer World Bank.

Chile s Fiscal Rule

Fiscal rules in the widest sense refer to budgetary institutions (Alesina and Perotti, 1999), i.e. a set of rules and regulations according to which budgets are drafted, approved and implemented. Fiscal rules in a more narrow sense refer to legislated restrictions on fiscal policy that set specific limits

Fiscal Rules in a Volatile World: A Welfare-Based Approach

Fiscal Rules in a Volatile World: A Welfare-Based Approach Prepared by Carlos Garcia, Jorge E. Restrepo, and Evan Tanner1 Authorized for distribution by J. Roldós March 2011 Abstract It is widely agreed that a fiscal rule should boost discipline and credibility, reduce macroeconomic volatility, and be easily understood.


Restrepo, Jorge, Carlos García, and Evan Tanner, 2011, Fiscal Rules in a Volatile World: A Welfare-Based Approach, IMF Working Paper 11/56.

Managing terms of trade volatility - World Bank

Mar 18, 2016 economic volatility and procyclical fiscal is unlikely to be productive. There is more policy are closely related. This finding is con- reason to expect results from institutional sistent with the idea that a volatile macro- reforms that change the rules of the game economic environment, in which the for fiscal decisionmaking.

Fiscal Rules and Discretion: Insights from Theory

Fiscal Rules † Political explanations for rising debt justify fiscal rules † Current governments want to be fiscally irresponsible † They want future governments to be fiscally responsible † Governments across the world have adopted fiscal rules † Types: expenditure, revenue, deficit, debt † Level: subnational, national, supranational

Simple Monetary Rules Under Fiscal Dominance

debt, even aggressive rules that satisfy the Taylor principle can produce unique equilibria. But following such rules results in extremely volatile inflation. This leads to very frequent violations of the zero lower bound on nominal interest rates that make such rules infeasible.

WIDER Working Paper 2017/53

The fiscal rule was to operate under the principle that permanent spending should follow permanent revenues (determining what is permanent in an uncertain and volatile world is not easy) and was expected to contain fiscal spending and isolate it from political and social pressures.

Deep Roots of Fiscal Behavior

policy anchors such as fiscal rules and IMF-supported stabilization programs) tend to have a significant effect on fiscal policy behavior. The results also indicate that higher government debt leads to more volatile fiscal behavior, while fiscal rules and higher institutional quality reduce the volatility of fiscal policy over time.

Inflation Data Appendix - World Bank

World Economic Outlook database. Fiscal rules. A fiscal rule imposes a long-lasting constraint on fiscal policy through numerical limits on budgetary aggregates. The IMF Fiscal Rules Dataset 1985-2015 (Schaechter et al. 2012) provides systematic information on the use and design of fiscal rules covering national and supranational fiscal rules

World Bank Document

Apr 13, 2018 governance and ownership structure, the sources of funding and the rules of withdrawal of resources. The note focuses on sovereign wealth funds because they have gained importance since 2009 due to the Global Financial Crisis and increased fiscal and macro-volatility. This can also be relevant for the Southern African

Fiscal Rules and Pro-cyclicality of the Fiscal Policy in

1. States should conduct counter-cyclical fiscal policies in order to smooth out the business cycle and enhance the effectiveness of the monetary policy. 2. Fiscal rules should be amended in order to take into account the intrinsic characteristics of the economies of the sub-region. For instance, one could move toward a fiscal rule

A Cushion for the Poor - International Monetary Fund

This article is based on Fiscal Rules in a Volatile World: A Welfare- Based Approach, by Carlos Garcia, Jorge Restrepo, and Evan Tanner, which appeared in the July August 2011 Journal of Policy Modeling

Fiscal procyclicality in emerging markets: The role of

On the other hand, poorly designed fiscal rules may worsen policy cyclicality. Eyraud et al. (2018) point to nominal deficit caps as an example of a specific rule that could induce fiscal procyclicality. Ultimately, it is an empirical question as to the effect of fiscal rules generally, and specific types of fiscal rules in particular, on the

Closing Indonesia s infrastructure gap - The World Bank

Strict adherence to fiscal rules Indonesia s fiscal rule, set out in Regulation 23/2003, (1) limits the cumulative deficit of the general government Budget to a maximum of 3 percent of GDP for the year, and (2) constrains the cumulative general government debt to a maximum of 60 percent of GDP for the year.

Integrating Land Financing into Subnational Fiscal Management

be even more volatile. Third, subnational land assets presently occupy a regulatory gap in many existing intergovernmental fiscal frameworks. Intergovernmental rules govern most other sources of local revenue, establishing which taxes and user fees local governments can impose, and typically setting limits on tax rates.

Can Fiscal Rules Help Reduce Macroeconomic Volatility in the

of these fiscal rules in reducing the deficit bias and facilitating the convergence of interest rates (as extensively discussed in the paper by Buti, M. and Giudice, G. (2002): EMU's Fiscal Rules: What Can and Cannot be Exported, The European Commission, mimeo, February, at this Conference), there is still a


rules, (iii) no (or limited) earmarking but no extra-budgetary spending, (iv) coherence with country investment strategy, and (v) transparency and accountability. vi. faced with weak economic statistics in lebanon which impede analysis and decision making World bank staff developed two indicators of economic activity for lebanon:

Fiscal Rules for Natural Resource Funds

Fiscal rules multiyear constraints on government spending or public debt accumulation can help commit successive governments to stable macroeconomic policy, which is necessary for growing and diversifying an economy dependent on large, finite and volatile

Economic Stabilization in the Post-Crisis World: Are Fiscal

fiscal rules, our work is a natural complement to the large body of literature on monetary rules. Our work extends previous work on fiscal rules by addressing the issue for emerging and developing economies as well as advanced economies, considering the role of supranational

Discussion Paper No. 2002/41 Countercyclical Fiscal Policy

If fiscal revenues are highly volatile, structural budget rules and commodity stabilization funds may provide the necessary framework to achieve saving (dissaving) during expansions (contractions).

How to Cope with Volatile Commodity Export Prices: Four

such rules are violated in practice, even more so for EM countries than for advanced countries. One major reason is overly optimistic forecasts by official agencies.8 For the annual Bank of Chile conference I attended in 2010, I examined hiles successful fiscal institutions.9 I concluded that the key feature is the delegation to independent