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The Imf Approach Towards The Structural Deficit

Author

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  • SORIN GABRIEL ANTON

    (Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, sorin.anton@uaic.ro, Iasi, Romania,)

  • CRISTINA PUIU

    (Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, puiu.cristina@yahoo.com, Iasi, Romania,)

Abstract

The aim of this paper is to assess the methodologies and techniques used by the International Monetary Fund in order to estimate the structural fiscal balance, which is crucial for evaluating fiscal sustainability. Ensuring fiscal discipline gained a major importance especially during the recent financial crisis. In the case of the Economic and Monetary Union in Europe the previous indicators were not enough to establishing an environment of fiscal discipline. Therefore, new limits regarding the structural deficit were imposed through the Treaty of Stability Coordination and Governance in the Economic and Monetary Union. However, experience shows that removing cyclical and other transitory elements from revenues and expenditure is not an easy task. This study will provide a clear understanding of the methodology used by the International Monetary Fund in order to quantify the structural deficit, its shortcomings, a comparison with the results obtained by the European Commission and recommendations. Furthermore, it will show that, despite the limits of the evaluating the structural fiscal balance, this represents the right indicator for stating where the economy is heading over the medium term.

Suggested Citation

  • Sorin Gabriel Anton & Cristina Puiu, 2014. "The Imf Approach Towards The Structural Deficit," Journal of Public Administration, Finance and Law, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 0(Special i), pages 44-49, September.
    • Handle: RePEc:aic:jopafl:y:2014:v:s1:p:44-49
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    References listed on IDEAS

    as
    1. Laura dos Reis & Paolo Manasse & Ugo Panizza, 2007. "Targeting the Structural Balance," Research Department Publications 4507, Inter-American Development Bank, Research Department.
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    3. International Monetary Fund, 2012. "Ireland: Eighth Review Under the Extended Arrangement; Staff Report; Staff Supplements; and Press Release on the Executive Board discussion," IMF Staff Country Reports 2012/336, International Monetary Fund.
    4. International Monetary Fund, 2012. "Ireland: Sixth Review Under the Extended Arrangement: Staff Report; Staff Supplement; Press Release on the Executive Board Discussion," IMF Staff Country Reports 2012/147, International Monetary Fund.
    5. Laura dos Reis & Paolo Manasse & Ugo Panizza, 2007. "Targeting the Structural Balance," Research Department Publications 4507, Inter-American Development Bank, Research Department.
    6. Gilles Mourre & George-Marian Isbasoiu & Dario Paternoster & Matteo Salto, 2013. "The cyclically-adjusted budget balance used in the EU fiscal framework: an update," European Economy - Economic Papers 2008 - 2015 478, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    7. International Monetary Fund, 2011. "Kingdom of Netherlands: Netherlands: Selected Issues and Analytical Notes," IMF Staff Country Reports 2011/143, International Monetary Fund.
    8. International Monetary Fund, 2012. "Ireland: Fifth Review Under the Extended Arrangement: Staff Report; Staff Supplement; Press Release on the Executive Board Discussion," IMF Staff Country Reports 2012/048, International Monetary Fund.
    9. International Monetary Fund, 2012. "Romania: Fifth Review Under the Stand-By Arrangement: Staff Report; Staff Supplement; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Romania," IMF Staff Country Reports 2012/157, International Monetary Fund.
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    More about this item

    Keywords

    structural deficit; cyclically adjusted balance; one-off measures; fiscal compact;
    All these keywords.

    JEL classification:

    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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