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Expenditure baseline projections (hereafter, “base¬lines”) are a key analytical concept in budget preparation that refers to estimates of future expenditure on the assumption that current policies remain unchanged. They serve as reference points against which other data, such as proposed or approved budgets, or expenditure ceilings, can be compared. In many countries they are a basic tool for starting the preparation of the budget. They represent neither future spending allocations nor total expected outturn as they do not incorporate estimates of the cost of new policies and the expected impact of saving measures. Other features of baselines are that they are generally produced over a multiyear period, they can be calcu¬lated at any level or form of the budget classification (that is, ministries, economic classification, specific policies, functions or programs), and can be summed up to higher levels (such as the whole budget). Hence, they can be useful at both a micro and an aggregate level. This note aims to clarify and establish a framework that covers baselines’ various purposes and uses. It first discusses the definition and objectives of baselines and the methodology used for producing them before outlining how they should be prepared. It concludes with a discussion of the key success factors for making the most effective use of baselines.

Economic policy. --- Budget planning and preparation --- Budget Systems --- Budget --- Budgeting & financial management --- Budgeting --- Currency crises --- Economic & financial crises & disasters --- Economic sectors --- Economics of specific sectors --- Economics --- Economics: General --- Expenditure --- Expenditures, Public --- Financial crises --- Fiscal Policy --- Fiscal policy --- Fiscal space --- Foreign Exchange --- Income economics --- Informal Economy --- Informal sector --- Labor --- Labour --- Macroeconomics --- National Budget --- National Government Expenditures and Related Policies: General --- Public finance & taxation --- Public Finance --- Public financial management (PFM) --- Underground Econom --- Wage adjustments --- Wages --- Wages, Compensation, and Labor Costs: General --- France

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What policy space does a country have for a short-term response to a catastrophic event? To quantify this space, the paper proposes a policy space index. The index combines a quantitative, albeit relatively limited and narrow, fiscal space concept with the indicators of nominal monetary space and reserve space. Each nominal policy space indicator is then adjusted for individual country’s institutional features, such as the status of its currency, income group, access to capital markets, debt distress level, and the exchange rate regime. The final policy space index is derived as a composite of the three nominal policy space indicators, each adjusted for five institutional features. This index is different from the approach to measure fiscal space at the IMF and requires more work before it can be used operationally. The proposed index allows measuring the overall policy space in each country directly in percent of GDP. By way of illustration, the paper applies the index to the Covid-19 crisis.

United States --- Macroeconomics --- Economics: General --- Foreign Exchange --- Exports and Imports --- Money and Monetary Policy --- Banks and Banking --- Policy Objectives --- Policy Designs and Consistency --- Policy Coordination --- Global Outlook --- International Policy Coordination and Transmission --- Crisis Management --- Fiscal Policy --- International Lending and Debt Problems --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Interest Rates: Determination, Term Structure, and Effects --- Economic & financial crises & disasters --- Economics of specific sectors --- Currency --- Foreign exchange --- International economics --- Monetary economics --- Banking --- Fiscal space --- Fiscal policy --- Exchange rate arrangements --- Debt sustainability --- External debt --- Reserve currencies --- Money --- Central bank policy rate --- Financial services --- Currency crises --- Informal sector --- Economics --- Debts, External --- Interest rates

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This paper argues that the type of COVID-19 containment measures affects the trade-offs between infection cases, economic activity and sovereign risk. Using local projection methods and a year and a half of high-frequency daily data covering 44 advanced and emerging economies, we find that smart (e.g. testing) as opposed to physical (e.g. lockdown) measures appear to be best placed to tackle these trade-offs. Initial conditions also matter whereby containment measures can be less disruptive when public health response time is fast and public debt is low. We also construct a database of daily fiscal announcements for Euro area countries, and find that sovereign risk is improved under a combination of large support packages and smart measures.

Argentina --- Macroeconomics --- Economics: General --- Money and Monetary Policy --- Diseases: Contagious --- Public Finance --- Fiscal Policies and Behavior of Economic Agents: General --- National Government Expenditures and Related Policies: General --- National Budget, Deficit, and Debt: General --- Fiscal Policy --- Market Structure and Pricing: Oligopoly and Other Forms of Market Imperfection --- Production, Pricing, and Market Structure --- Size Distribution of Firms --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Health Behavior --- Debt --- Debt Management --- Sovereign Debt --- Health: General --- Economic & financial crises & disasters --- Economics of specific sectors --- Monetary economics --- Infectious & contagious diseases --- Public finance & taxation --- Health economics --- Fiscal space --- Fiscal policy --- Credit default swap --- Money --- COVID-19 --- Health --- Public debt --- Currency crises --- Informal sector --- Economics --- Credit --- Communicable diseases --- Debts, Public --- Covid-19