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Conventional fiscal accounting methodologies do not appropriately account for governments’ noncash policies, such as their contingent liabilities. When these liabilities are called, budget costs can be large, as evidenced by the United States’ saving and loan crisis. In general, deficit measures may underestimate the macroeconomic impact of government policies, promoting the substitution of noncash for cash expenditure and increasing future financing requirements. The paper describes extended deficit measures to address the problem, but notes their limited practical value. Nonetheless, some alternative methods of valuing contingent liabilities are proposed to gauge fiscal impact and facilitate budgetary control.

Budget --- Budgeting & financial management --- Budgeting --- Contingent liabilities --- Currencies --- Debt Management --- Debt --- Finance --- Financial institutions --- Financial instruments --- Fiscal policy --- General Financial Markets: General (includes Measurement and Data) --- Government and the Monetary System --- Government liabilities --- Governmental Loans, Loan Guarantees, Credits, and Grants --- Industries: Financial Services --- Investment & securities --- Investments: General --- Loan guarantees --- Loans --- Monetary economics --- Monetary Systems --- Money and Monetary Policy --- Money --- Payment Systems --- Public Administration --- Public finance & taxation --- Public Finance --- Public financial management (PFM) --- Public Sector Accounting and Audits --- Regimes --- Securities --- Sovereign Debt --- Standards --- United States