Targeting the Structural Balance

Laura dos Reis, Paolo Manasse and Ugo Panizza

No 4507, Research Department Publications from Inter-American Development Bank, Research Department

Abstract: This paper discusses whether a country should conduct fiscal policy by targeting a structural (or cyclically adjusted) fiscal balance. The paper is divided into three sections. The first section discusses the concept of cyclically adjusted balance (CAB) and points out practical and conceptual problems related to the interpretation and the measurement of a CAB. The second section discusses the theoretical rationale for having a fiscal rule in general and a rule defined in terms of a cyclically adjusted balance in particular. The third section discusses conceptual and practical problems with adopting fiscal rules and rules that target the structural balance.

Date: 2007-03
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Citations: View citations in EconPapers (12)

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Working Paper: Targeting the Structural Balance (2007)
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