IDEAS home Printed from https://ideas.repec.org/p/ifs/ifsewp/04-29.html
   My bibliography  Save this paper

Updating the UK's code for fiscal stability

Author

Listed:
  • Carl Emmerson

    (Institute for Fiscal Studies and Institute for Fiscal Studies)

  • Christine Frayne

    (Institute for Fiscal Studies and European Commission (formerly IFS staff))

  • Sarah Love

    (Institute for Fiscal Studies)

Abstract

The 1998 Code for Fiscal Stability sets out the framework within which UK fiscal policy is now set. While having such a code does not make it easier for a Government to meet its fiscal objectives, it may improve the economic credibility of the policy process. To date the Code has generally worked well, and in any case many of the Treasury's practices exceed the minimum requirements of the Code. However, improvements could be made in the light of recent experiences. In particular it would be preferable for less emphasis to be placed on the precise forecasts for fiscal aggregates and greater emphasis to be placed on the magnitude of the risks to those forecasts. Using the projections contained in the March 2004 Budget, and information on the size of errors made in the past, we estimate that there is now a 60% chance that the Chancellor's "golden rule" will be met without further tax increases or spending cuts. This compares to 74% for the forecast made by the Treasury 12 months earlier. As well as clarifying how cautious forecasts are, the uncertainty surrounding projections for fiscal aggregates also has implications for the way in which progress towards any fiscal rules should be interpreted.

Suggested Citation

  • Carl Emmerson & Christine Frayne & Sarah Love, 2004. "Updating the UK's code for fiscal stability," IFS Working Papers W04/29, Institute for Fiscal Studies.
    • Handle: RePEc:ifs:ifsewp:04/29
    as

    Download full text from publisher

    File URL: http://www.ifs.org.uk/wps/wp0429.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Suman Basu & Carl Emmerson & Christine Frayne, 2003. "An examination of the IFS corporation tax forecasting record," IFS Working Papers W03/21, Institute for Fiscal Studies.
    2. Buiter, Willem H, 2001. "Notes on 'A Code for Fiscal Stability.'," Oxford Economic Papers, Oxford University Press, vol. 53(1), pages 1-19, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pierre Richard Agénor & Devrim Yilmaz, 2006. "The Tyranny of Rules: Fiscal Discipline, Productive Spending, and Growth," Economics Discussion Paper Series 0616, Economics, The University of Manchester.
    2. Achim Truger, 2015. "Implementing the golden rule for public investment in Europe," Working Paper Reihe der AK Wien - Materialien zu Wirtschaft und Gesellschaft 138, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik.
    3. Alexandru Minea & Patrick Villieu, 2010. "Dette publique, croissance et bien-être : une perspective de long terme," Post-Print halshs-00672605, HAL.
    4. Jerome Creel, 2003. "Ranking Fiscal Policy Rules: the Golden Rule of Public Finance vs. the Stability and Growth Pact," Documents de Travail de l'OFCE 2003-04, Observatoire Francais des Conjonctures Economiques (OFCE).
    5. repec:spo:wpmain:info:hdl:2441/eu4vqp9ompqllr09j0h0g8tgo is not listed on IDEAS
    6. Jerome Creel & Paul Hubert & Francesco Saraceno, 2012. "An assessment of Stability and Growth Pact Reform Proposals in a Small-Scale Macro Framework," Documents de Travail de l'OFCE 2012-04, Observatoire Francais des Conjonctures Economiques (OFCE).
    7. Leopold Diebalek & Doris Prammer, 2006. "Reform of the Stability and Growth Pact," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 78-109.
    8. Rafal Benecki & Jens Hölscher & Mariusz Jarmuzek, 2006. "Fiscal Transparency and Policy Rules in Poland," CASE Network Studies and Analyses 0327, CASE-Center for Social and Economic Research.
    9. Malcom SAWYER, 2009. "Budget deficits, public debt and the level of public investment," Departmental Working Papers 2009-31, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    10. Marco Buti & Sylvester Eijffinger & Daniele Franco, 2003. "Revisiting EMU's Stability Pact: A Pragmatic Way Forward," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 19(1), pages 100-111.
    11. Saeed Ahmed, 2006. "Corporate Tax Models: A Review," SBP Working Paper Series 13, State Bank of Pakistan, Research Department.
    12. Ozkan, F Gulcin & Ismihan, Mustafa, 2007. "Public investment: a remedy or a curse? Examining the Role of Public Investment for Macroeconomic Performance," CEPR Discussion Papers 6139, C.E.P.R. Discussion Papers.
    13. Achim Truger, 2015. "Implementing the Golden Rule for Public Investment in Europe: Safeguarding Public Investment and Supporting the Recovery. WWWforEurope Policy Paper No. 22," WIFO Studies, WIFO, number 57898, March.
    14. Buti, M. & Eijffinger, S.C.W. & Franco, D., 2003. "Revisiting the Stability and Growth Pact : Grand Design or Internal Adjustment?," Other publications TiSEM 2e5a01d9-9a1f-492d-995f-a, Tilburg University, School of Economics and Management.
    15. Sugata Ghosh & Iannis A. Mourmouras, 2004. "Debt, Growth and Budgetary Regimes," Bulletin of Economic Research, Wiley Blackwell, vol. 56(3), pages 241-250, July.
    16. Seppo Honkapohja & Frank Westermann, 2009. "Fiscal Policy and Macroeconomic Stabilisation in the Euro Area: Possible Reforms of the Stability and Growth Pact and National Decision-Making Processes," Palgrave Macmillan Books, in: Seppo Honkapohja & Frank Westermann (ed.), Designing the European Model, chapter 6, pages 177-228, Palgrave Macmillan.
    17. José Roberto Rodrigues Afonso & Erika Amorim Araújo & Geraldo Biasoto Júnior, 2005. "Fiscal Space and Public Sector Investments in Infrastructure: A Brazilian Case-Study," Discussion Papers 1141, Instituto de Pesquisa Econômica Aplicada - IPEA.
    18. Philip Arestis & Malcolm Sawyer, 2006. "The Case for Fiscal Policy," Palgrave Macmillan Books, in: Philip Arestis & Jesus Ferreiro & Felipe Serrano (ed.), Financial Developments in National and International Markets, chapter 6, pages 103-117, Palgrave Macmillan.
    19. Leopold Diebalek & Walpurga Köhler-Töglhofer & Doris Prammer, 2006. "Reform of the Stability and Growth Pact," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue Q1/06, pages 78-109.
    20. P R Agénor & D Yilmaz, 2006. "The Tyranny of Rules: Fiscal Discipline, Productive Spending, and Growth," Centre for Growth and Business Cycle Research Discussion Paper Series 73, Economics, The University of Manchester.
    21. repec:hal:wpspec:info:hdl:2441/eu4vqp9ompqllr09j0h0g8tgo is not listed on IDEAS
    22. Jeff Huther, 1999. "An Integrated Approach to Government Financial Policy," Treasury Working Paper Series 99/08, New Zealand Treasury.

    More about this item

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ifs:ifsewp:04/29. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emma Hyman (email available below). General contact details of provider: https://edirc.repec.org/data/ifsssuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.