This article describes the Treasury’s fiscal aggregate projection model (FAPmod) that underpinned the medium-term fiscal projections published in the 2009-10 Budget. FAPmod will also form the basis of future medium-term fiscal projections and the fiscal projections in the third...

The fact that the literature tends to find optimistic biases in national fiscal projections has led to a growing recognition in the academic and policy arenas of the need for independent forecasts in the fiscal domain, prepared by independent agencies, such as the European Commission in the case...

We analyse the determinants of the structure of public debt in the case of Spain, from a sub-national perspective. The endogenous shift in the composition of debt (among shortvs long-term instruments, and loans vs securities) depends on observable measures of credit and liquidity risks. To...

We present evidence pointing to the fact that international agencies' fiscal forecasts were affected to some extent by the same type of problems that the literature widely acknowledges for governmental ones. Informational shortages may lead independent agencies' staff to internalize “political...

The reform of the Stability and Growth Pact and the incorporation of “debt brake” rules into national legislation have heavily increased the importance of structural balances in economic policymaking in Europe. As defined by the European Commission, structural balances are calculated by...

This paper examines the pricing of public debt in a quantitative macroeconomic model with government default risk. Default may occur due to a fiscal policy that does not preclude a Ponzi game. When a build-up of public debt makes this outcome inevitable, households stop lending such that the...

Substantial fiscal consolidation was achieved under the aegis of the 2003 Fiscal Responsibility and Budget Management Act. While deficits widened anew in 2008 and 2009, against the backdrop of the global financial and economic crisis, efforts to reduce them have resumed since. To ensure...

We develop a macroeconomic model where the government does not guarantee to repay debt. We ask whether movements in the price of government bonds can be rationalized by lenders' unwillingness to fully roll over debt when the outstanding level of debt exceeds the government's repayment capacity....

The aim of this paper is to study empirical evidence supporting the hypothesis that discretionary fiscal policy is asymmetric over the business cycle in Uruguay. We estimate fiscal reaction functions covering annual data from 1970 through 2009, in which the dynamics of fiscal balance is due to...

The paper revisits the empirical link between fiscal policy and macroeconomic stability. Our basic presumption is that by definition, the operation of automatic stabilizers should always and everywhere contribute to greater macroeconomic stability (output and consumption). However, two stylized...