The basic assumption on which leading indicators are built is the common movement of macroeconomic variables representing the aggregate business cycle, giving information on turning points for different macroeconomic variables over time. Indicators passing through the turning points with few...

Estimates of potential output and the output gap are essential elements in the toolkit of policymakers. Latest changes in the European fiscal framework have strengthened significantly the role of structural budget balances, which rest on output gap calculations. With the adoption of the Fiscal...

This paper provides a microeconometric analysis of extensive margin labour supply elasticities in Slovakia. We find that a one percent increase in net wage increases the probability of economic activity by 0.263 percentage points. Taking into account tax and transfer system details valid in...

Under substantial market pressure, policymakers have proposed a diverse set of far-reaching changes to the basic European fiscal architecture. The adoption of the so called “Six-pack”, “Two-pack” and the agreement on the Fiscal Compact made the fiscal framework more complex, but the...

We study the interactions among fiscal policy, fiscal limits and sovereign risk premia. The fiscal limit, which measures the government’s ability to service its debt, arises endogenously from dynamic Laffer curves and is a random variable. A nonlinear relationship between sovereign risk premia...

The paper sets out a DSGE model designed and calibrated to match key stylized facts about the Slovak economy. The model includes a detailed fiscal policy block that allows a thorough analysis of fiscal policy measures. To evaluate the performance of the model, the response of the economy to a...

The sustainability of public finances is a complex concept that needs to be analyzed through different angles. The Council for Budget Responsibility has decided to analyze long-term trends from four spects: (1) solvency, (2) intergenerational equity (fairness), (3) growth, and (4) stability. In...

To identify fiscal risk, the CBR uses a pragmatic approach by employing a set of models and indicators, quantitative and qualitative assessments organized in a coherent framework. The inter-temporal net worth serves as an organizing principle. It has the advantage over other frameworks that: i)...

This discussion paper provides an overview of the analytical indicators used to evaluate fiscal policy in the short, medium and long term. It focuses on their clear definition and their advantages/disadvantages, and accentuates the importance of their clear interpretation. In addition to the...

There seems to be a fair degree of consensus that synergies between fiscal rules and independent fiscal institutions can be more effective in fighting the deficit bias or to follow more closely optimal policies. More and more fiscal councils are being created each year, especially in the...