Conventionally, fiscal policy analysis makes a distinction between "discretionary" budget changes and "built-in stability". This distinction is the first step to defining a structural budget balance operationally. Budget deficits vary automatically with the business cycle. Revenues automatically...

Portugal’s fiscal policy has failed to durably reduce the deficit below the Stability and Growth Pact threshold of 3% of GDP and was submitted to the excessive deficit procedure of the EU Commission for a second time in 2005. The paper describes fiscal developments in Portugal over the past...

This paper is one of three in this Working Paper Series, along with those by Chouraqui et al. and Blanchard, in which the assessment of fiscal policy is reconsidered. It reviews the question of what type of budget indicators the OECD should compile. Instead of the cyclically-adjusted budget, it...

This paper reviews recent trends in fiscal performance in Brazil, estimates fiscal reaction functions for the consolidated public sector and different levels of government, and tests for the sustainability of the public debt dynamics. The empirical analysis, based on monthly data for the period...

This paper uses the OECD's economic model, INTERLINK, to examine the consequences of eliminating the U.S. federal government deficit. Such action could lead to either lower real interest rates, lower inflation rates or a smaller current account deficit, depending on the stance of monetary...

This paper assesses to what extent some components of government budgets affected by the macroeconomic situation operate to smooth the business cycle in individual OECD countries. It is shown that these automatic fiscal stabilisers have generally reduced cyclical volatility in the 1990s....

It is often claimed that tax and welfare reforms that aim at enhancing efficiency may come at the cost of cyclical stabilisation. Reducing the generosity of welfare systems and lowering taxes may boost efficiency and output, and improve market adjustment to shocks. But, by reducing the size of...

Accounting conventions usually leave some room for judgment, which governments may be tempted to take advantage of, especially when fiscal rules bite or threaten to do so. The European experience over the past decade -- documented here in great detail -- illustrates that fiscal gimmicks come in...

Measuring cyclically-adjusted budget balances for OECD countries An important tool in the analysis of fiscal policy is the distinction between structural and cyclical components of the budget balance. This paper describes work undertaken to re-estimate and re-specify the elasticities underlying...

The paper examines the effects of demographic changes on government budgets and national savings. Most OECD countries will experience a rapid ageing of the population in the future and this development will put public pensions, health care systems and government budgets in general under...