Long-term fiscal projections and their relationship with the intertemporal budget constraint: An application to New Zealand

John Janssen ()
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John Janssen: The Treasury, https://treasury.govt.nz/

No 02/05, Treasury Working Paper Series from New Zealand Treasury

Abstract: The fiscal gap calculates the change in fiscal policy settings needed to achieve a particular debt target at some point in the future. This working paper calculates fiscal gaps for New Zealand under a range of scenarios, including alternative spending growth, debt targets and interest rates. A positive (negative) fiscal gap indicates that a permanent increase (decrease) in the primary surplus is required to achieve a selected debt target in a particular terminal year. The scenarios suggest that under a range of alternative assumptions the fiscal gap out to 2051 is positive. These results are in accord with previous long-term fiscal projections, which, unlike the fiscal gap, have not been explicit about the nature of long-term fiscal imbalances. The analysis provides a platform for the further examination of potential long-term fiscal imbalances under a wider range of assumptions (e.g., around demographics, labour force participation, health spending) as well as alternative modelling techniques that allow for uncertainty.

Keywords: Long-term fiscal imbalance; intertemporal budget constraint (search for similar items in EconPapers)
JEL-codes: E62 H60 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2002-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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