Fiscal sustainability and the financial cycle

Claudio Borio, Marco Lombardi and Fabrizio Zampolli

No 552, BIS Working Papers from Bank for International Settlements

Abstract: A frequently neglected aspect of financial booms and busts - financial cycles - is their impact on fiscal positions. And yet, the latest financial crisis and history show that these cycles can wreak havoc with public finances. After reviewing the impact of financial cycles on fiscal positions, we offer a new tool to estimate cyclically adjusted balances, illustrate its performance, explore its strengths and weaknesses, and sketch out a way forward to measuring sustainability in a more holistic way.

Keywords: financial cycle; financial crisis; cyclically adjusted fiscal balance (search for similar items in EconPapers)
Pages: 30 pages
Date: 2016-03
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (21)

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Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:552

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