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The paper presents a simple model for discussing the effects of deficit limits and budget rules on fiscal policy. I find that limits on deficit-output ratios provide incentives to implement procyclical policies when the economy is in intermediate states, and countercyclical policies only in very "good" and very "bad" economic times. As a result, fiscal "reaction functions" are not monotonically related to the state of the economy. Deficit limits are found to exert discipline only provided the limit is tight and the expected sanction large, albeit at a relatively large welfare cost. Moreover, when fiscal choices are made under a veil of ignorance about the output gap, an increase in volatility is likely to raise the level of the budget deficit. Finally, concerning the design of fiscal frameworks, when excessive deficits arise from a political bias, deficit limits should be symmetric and not state-contingent.

Budget deficits -- Econometric models. --- Economic stabilization -- Econometric models. --- Electronic books. -- local. --- Fiscal policy -- Econometric models. --- Budgeting --- Macroeconomics --- Public Finance --- Production and Operations Management --- Fiscal Policy --- National Budget --- Budget Systems --- Macroeconomics: Production --- Debt --- Debt Management --- Sovereign Debt --- Budgeting & financial management --- Public finance & taxation --- Budget planning and preparation --- Output gap --- Fiscal policy --- Government debt management --- Fiscal rules --- Budget --- Production --- Economic theory --- Debts, Public --- United Kingdom

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Budget revenue forecasts should be best estimates of expected receipts. Often they are not. This paper analyzes the rationale for overstated revenue forecasts and derives conditions for intentional biases. A theoretical model demonstrates that overstated revenue forecasts can be the result of the government's attempt to boost unobserved revenue collection effort. If positive forecast errors are costly and undermine public credibility of budget expenditure plans, the reverse outcome is possible and governments may understate revenue forecasts. A case study for Azerbaijan is presented in support of the former incentive motive.

Electronic books. -- local. --- Fiscal policy -- Econometric models. --- Tax revenue estimating -- Econometric models. --- Budgeting --- Macroeconomics --- Public Finance --- Taxation --- Taxation, Subsidies, and Revenue: General --- National Budget --- Budget Systems --- Forecasts of Budgets, Deficits, and Debt --- Public finance & taxation --- Budgeting & financial management --- Revenue forecasting --- Revenue administration --- Budget planning and preparation --- Tax administration core functions --- Macroeconomic and fiscal forecasts --- Tax administration and procedure --- Revenue --- Budget --- Economic forecasting --- Azerbaijan, Republic of

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The Flexible System of Global Models (FSGM) is a group of models developed by the Economic Modeling Division of the IMF for policy analysis. A typical module of FSGM is a multi-region, forward-looking semi-structural global model consisting of 24 regions. Using the three core modules focused on the G-20, the euro area, and emerging market economies, this paper outlines the theory under-pinning the model, and illustrates its macroeconomic properties by presenting its responses under a wide range of experiments, including monetary, financial, demand, supply, fiscal and international shocks.

Econometrics. --- Monetary policy--Econometric models. --- Fiscal policy--Econometric models. --- Economics, Mathematical --- Statistics --- Exports and Imports --- Inflation --- Macroeconomics --- General Aggregative Models: Keynes --- Keynesian --- Post-Keynesian --- General Aggregative Models: Forecasting and Simulation --- Monetary Policy --- Fiscal Policy --- Open Economy Macroeconomics --- Macroeconomic Aspects of International Trade and Finance: Forecasting and Simulation --- Trade: General --- Macroeconomics: Consumption --- Saving --- Wealth --- Price Level --- Deflation --- Energy: Demand and Supply --- Prices --- International economics --- Consumption --- Oil prices --- Exports --- Imports --- National accounts --- International trade --- Economics --- United States --- Monetary policy --- Fiscal policy --- Econometric models.

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We develop a New-Open-Economy-Macro model in which Ricardian equivalence does not hold because of (i) distortionary labor and corporate income taxation; (ii) limited asset market participation; and (iii) because the overlapping-generations structure results in a disconnect between current and future generations. We consider a permanent increase in government debt following a cut in labor or corporate income taxes in a small and large open economy. We analyze the sensitivity of the results to the key structural parameters of the model and argue that under plausible assumptions there will be significant crowding-out effects associated with permanent increases in government debt.

Electronic books. -- local. --- Fiscal policy -- Econometric models. --- Macroeconomics. --- Political Science --- Law, Politics & Government --- Public Finance --- Fiscal policy --- Econometric models. --- Tax policy --- Taxation --- Government policy --- Economics --- Economic policy --- Finance, Public --- Banks and Banking --- Macroeconomics --- Fiscal Policy --- Open Economy Macroeconomics --- International Policy Coordination and Transmission --- Fiscal Policies and Behavior of Economic Agents: General --- Debt --- Debt Management --- Sovereign Debt --- Interest Rates: Determination, Term Structure, and Effects --- Personal Income and Other Nonbusiness Taxes and Subsidies --- Macroeconomics: Consumption --- Saving --- Wealth --- Labor Economics: General --- Public finance & taxation --- Finance --- Welfare & benefit systems --- Labour --- income economics --- Public debt --- Real interest rates --- Labor taxes --- Consumption --- Labor --- Financial services --- Taxes --- National accounts --- Debts, Public --- Interest rates --- Income tax --- Labor economics --- United States

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This paper introduces fiscal policy in a model of sovereign risk spreads ("spreads"). Using panel data from emerging market countries, we find that reductions in public expenditure are a more powerful tool for reducing spreads than increases in revenues. Specifically, cuts in current spending lower spreads by more than cuts in investment spending, and they also lower spreads by more than increases in revenue. We also show that debt-financed current spending increases sovereign risk by more than tax-financed current spending, suggesting that international investors have some preference for the latter. In line with the empirical literature on the determinants of spreads, we find that liquidity and solvency indicators, as well as macroeconomic fundamentals, are also important determinants of spreads.

Capital market. --- Electronic books. -- local. --- Fiscal policy -- Econometric models. --- Political Science --- Law, Politics & Government --- Public Finance --- Fiscal policy --- Econometric models. --- Capital markets --- Market, Capital --- Tax policy --- Taxation --- Government policy --- Finance --- Financial institutions --- Loans --- Money market --- Securities --- Crowding out (Economics) --- Efficient market theory --- Economic policy --- Finance, Public --- Financial Risk Management --- Macroeconomics --- Inflation --- Fiscal Policy --- International Financial Markets --- Fiscal Policies and Behavior of Economic Agents: Other --- Debt --- Debt Management --- Sovereign Debt --- National Government Expenditures and Related Policies: General --- Financial Crises --- Price Level --- Deflation --- Public finance & taxation --- Economic & financial crises & disasters --- Current spending --- Fiscal consolidation --- Expenditure --- Financial crises --- Prices --- Expenditures, Public --- United States