IMF高级宏观经济学研修班课程CT1405MMF-L06Fiscal

L-6FiscalPolicyandDebtSustainabilityPresenterClintonShiellsJointChina-IMFTrainingProgramCourseonMacroeconomicManagementandFinancialSectorIssuesCT14.05LectureOutlineHowdowemeasurefiscalpolicy?Fiscalpolicyforshort-termmacroeconomicstabilityFiscalpolicytoreducevulnerabilityFiscalpolicyforgrowthandpovertyreductionThistrainingmaterialisthepropertyoftheInternationalMonetaryFund(IMF)andisintendedforuseinIMFInstitutecourses.AnyreuserequiresthepermissionoftheIMFInstitute.”2HowDoWeMeasureFiscalPolicy?3MMFHowdowemeasurefiscalpolicy?•Fiscalpolicyistheuseofgovernmentspendingandtaxationtoinfluencetheeconomy.•Flowindicators•Overallfiscalbalance:differencebetweentotalrevenue(includinggrants)andtotalexpenditurespluslendingminusrepayments•Primarybalance:revenueminusnon-interest(primary)expenditure•Currentbalance:differencebetweencurrentrevenueandcurrentexpenditures•Cyclicallyadjustedbalance:nominalfiscalbalancenetofthecyclicalcomponentofthebudget4MMFHowdowemeasurefiscalpolicy?•Stockindicators•Networth:differencebetweenassetsandliabilities•Off-balance-sheetitemse.g.,contingentliabilities,public-privatepartnerships(PPPs)AssetsLiabilities•Financial(e.g.,governmentdeposits)•Nonfinancial(e.g.,publicroads)•Governmentdebt5MMFWhatisfiscalpolicyusedfor?•Short-termmacroeconomicstabilization•Reducingvulnerabilities•GrowthandpovertyreductionRelativeimportanceoftheseobjectivesdependsoncountrycircumstances.6MMFFiscalPolicyforShort-TermMacroeconomicStabilization7MMFFiscalpolicyformacroeconomicstabilizationFiscalpolicycanbeusedfor:•Mitigatingcyclicality(recurrentboomsandrecessions)•Taminginflation•Reducingexternalcurrentaccountimbalances•Managingfinancialcrises8MMFFiscalpolicyversusmonetarypolicy•Fiscalpolicyandmonetarypolicyshouldbedesignedintandemtogettherightmix.•Whichismoreeffectiveinmoderatingcyclicality?–Monetarypolicycanbeimplementedfasterbutfiscalpolicymayaffectoutputmoreimmediately.–Ingeneral,fiscalpolicyshouldplayabiggerrolewhenmonetarypolicyisconstrained(e.g.,withafixedexchangerate,orwhennominalinterestratesareclosetozero,orwhenfinancialsystemsarelessdeveloped).9MMF1.CountercyclicalfiscalpolicyTwochannels:•Automaticstabilizers•Discretionarymeasures(fiscalstimulus)10MMF(ii)DiscretionaryfiscalpolicyKeyconsiderations:•Sizeofthefiscalstimulus–Multiplier•Timing•Composition•DurationFiscalstimulusmeasuresshouldbetimely,targeted,andtemporary(TTT)11MMFWhatdeterminesthesizeofthemultiplier?Thesizeofthemultiplierislargerif:•“Leakages”arefew–Highmarginalpropensitytoconsume(c),lowmarginalpropensitytoimport(m)–NoRicardianequivalence•Monetaryconditionsareaccommodative–Smallornoincreaseininterestrates(nocrowdingout)–Smallornoexchangerateappreciation•Thecountry’sfiscalpositionafterthestimulusissustainable12MMF2.Fiscalpolicyandinflation•Fiscalpolicycanaffectinflationthroughmanychannels:–Intheshortrun,fiscalpolicyaffectsthepricelevelthroughitsimpactonaggregatedemand.–Fiscalpolicycanleadtosustainedinflationifthefiscaldeficitismonetized.–Fiscaladjustmentcanalsoaffectinflationviathedemandformoney,includingthroughinflationexpectations,interestrates,andconfidence.13MMF3.FiscalpolicyandthecurrentaccountbalancePPGGSISICAB14MMF•Thegovernment’ssaving-investmentbalanceislinkedtothecurrentaccountbalancethroughtheexpostincomeidentity:•Fiscalconsolidationcontributestoexternaladjustmentbutaone-for-oneimprovementinthecurrentaccountbalanceisunlikely.–Inthecaseofexpansionaryfiscalconsolidationthecurrentaccountbalancecouldevendeteriorate.4.Fiscalpolicyandfinancialcrises•Whenacapitalaccountcrisishits,fiscalconsolidationisusuallyunavoidablebecauseexternalfinancingdriesup.•Iffiscalproblemsaretherootcauseofthefinancialcrisis(lossofconfidence),fiscalconsolidationisnecessarytoregainmarketaccessandlowerthecostofborrowing.•Iffiscalproblemsarenottherootcause,fiscalcontractionmaybecounterproductive;fiscalexpansionmaybeneededinstead.15MMFAchievingmedium-termfiscalcredibility•Fiscalrulestoconstrainfuturebehavior•Reasonablemulti-yearspendingceilings•Fiscaltransparency;openandaccountablebudgeting–Establishapolitically-independentfiscalagenttomonitorfiscalpolicymaking–Providethepublicwithcomprehensiveinformationonthestateofpublicfinances•DisciplinedbudgetpreparationandexecutionMMF16MMF17Fiscalpolicyhasplayedasignificantroleinsupportingdemandsincethecrisis,withoff-budgetandLGFVspendingbecomingespeciallyimportantcountercyclicaltool…FiscalPolicytoReduceVulnerability18MMFFiscalpolicytoreducefiscalvulnerability•Acountry’spublicfinancesmayappearsound,butmaybevulnerableifunderlyingweaknessesthreatenitsfuturefiscalpositionandlimitthegovernment’sabilitytorespondtofiscalpolicychallenges.•Examples:–Debtsustainability–Contingentliabilitiesanddebtstructure–Fiscalrigidities–Emergingfiscalpressures,e.g.,demographicchanges19MMFDebtsustainability•Publicdebtissustainablewhenthegovernmentcancontinueservicingitwithouttheneedforanunrealisticallylargefuturecorrectiontoitsrevenueorprimary(non-interest)expenditurepath.•Marketexpectationsareimportanttoo—governmentsthatareabletoassuremarketsab