Finland’s Public Sector Balance Sheet: A Novel Approach to Analysis of Public Finance

Maren Brede and Christian Henn

No 2018/078, IMF Working Papers from International Monetary Fund

Abstract: We construct a comprehensive public sector balance sheet for Finland from 2000 to 2016 by complementing general government statistics with data on public corporations and public pensions. We show that exposure to valuation changes in equity markets through asset holdings and increases in pension liabilities relative to GDP amplify crisis impacts on public finances. We expand the balance sheet by including present value estimates of future fiscal flows; this allows us to perform fiscal stress tests and policy experiments. These analyses suggest that Finland’s public finances will remain sound provided ongoing reform and consolidation efforts to address aging pressures are implemented as planned.

Keywords: WP; balance sheet; GDP; financial asset; debt; Finland; Public Sector Balance Sheet; Intertemporal Fiscal Balances; Debt Sustainability; balance sheet approach; pension liability; Non-financial assets; government debt reduction; debt measure; Intertemporal balance sheet; static balance sheet; debt liability; net asset position; asset stock; price fluctuation; government assets; Financial statements; Pensions; Pension spending; Public sector; Fiscal stance; Global (search for similar items in EconPapers)
Pages: 44
Date: 2018-04-06
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Citations: View citations in EconPapers (4)

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