Fiscal Sustainability: A 21st Century Guide for the Perplexed

Evan Tanner ()

No 2013/089, IMF Working Papers from International Monetary Fund

Abstract: This paper critically reviews recent work regarding the sustainability of public debt. It argues that Debt Sustainability Analyses (DSAs) should be more than mere mechanical simulation exercises. Instead, a DSA should be linked to some objective regarding the distribution of fiscal burdens and distortions over time (in the tradition of Barro’s 1979 tax smoothing objective). The paper discusses objective functions that yield simple and transparent fiscal policy rules.

Keywords: WP; debt ratio; structural surplus; present value; Intertemporal solvency; tax smoothing; debt stabilization; fiscal rule; stochastic simulation; primary surplus; GDP ratio; market value; share price; war chest; surplus ratio-to-output; surplus target; surplus ratio; surplus process; nominal interest rate; public goods; surplus goal; Fiscal consolidation; Oil; Fiscal sustainability; Global (search for similar items in EconPapers)
Pages: 49
Date: 2013-04-22
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Citations: View citations in EconPapers (16)

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