Fiscal Impulses and their Fiscal Impact

Sheetal Chand

No 1992/038, IMF Working Papers from International Monetary Fund

Abstract: Fiscal impulse measures are used in the WEO and elsewhere to indicate the changing impact of the budget on the economy. Such measures are intended to provide more accurate indications of whether the budget is becoming more or less expansionary than would just observing moments in the actual budget balance. However, they have been criticized for lacking an analytical rationale. This paper uses a simple framework to show that the fiscal impulse measure can be analytically derived. While this removes one source of criticism, the measure, nevertheless, should be used carefully when making inferences of fiscal impact.

Keywords: WP; government expenditure; aggregate demand; revenue effect; impulse measure; aggregate demand impact; deficit measure; consumption function; real rate of interest; pump priming; inflation-adjusted deficit; government expenditures g; revenue response; output effect; effect of the budget; Macro-fiscal analysis; Budget planning and preparation; Consumption (search for similar items in EconPapers)
Pages: 18
Date: 1992-05-01
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Citations: View citations in EconPapers (11)

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