Search Results

You are looking at 1 - 8 of 8 items for :

  • "government consumption adjustment" x
Clear All
Mr. George Kopits and Mr. Steven A. Symansky

shocks, and by their interaction with automatic stabilizers. On the whole, for most countries, the variability in the baseline simulation is fairly close to the actual variability over the period 1974–95. The simulations were conducted for several major policy rules: a strict balanced-budget rule, enforced alternatively through adjustment in government consumption, adjustment in transfers, and tax adjustment; a no-deficit target and a 3 percent of GDP budget deficit ceiling, with allowance for automatic stabilizers when in surplus or below the ceiling, respectively

Luis-Felipe Zanna, Olivier Basdevant, Ms. Susan S. Yang, Ms. Genevieve Verdier, Mr. Joannes Mongardini, and Dalmacio Benicio
Botswana, Lesotho, Namibia, and Swaziland face the serious challenge of adjusting not only to lower Southern Africa Customs Union (SACU) transfers because of the global economic crisis, but also to a potential further decline over the medium term. This paper assesses options for the design of the needed fiscal consolidation. The choice among these options should be driven by (i) the impact on growth and (ii) the specificities of each country. Overall, a focus on government consumption cuts appears to minimize the negative impact on growth, and would be appropriate given the relatively large size of the public sector in each country.
Luis-Felipe Zanna, Olivier Basdevant, Ms. Susan S. Yang, Ms. Genevieve Verdier, Mr. Joannes Mongardini, and Dalmacio Benicio

References Box 1. SACU Revenue Sharing Formula Figures 1. Wage Bill in Sub-Saharan Africa, 2005–10 2. Impact of Government Consumption Adjustment for Namibia, in Response to a Decline in SACU Transfers 3. Comparison of the Different Single-Instrument Adjustment Strategies for Namibia 4. Cross-Country Comparison of Different Single-Instrument Fiscal Consolidations and Their Effects on Real GDP 5. GDP Response to Different Policy Instruments 6. Current Account Balance Response to Different Policy Instruments Tables 1. SACU Transfers in BLNS and

Luis-Felipe Zanna, Olivier Basdevant, Ms. Susan S. Yang, Ms. Genevieve Verdier, Mr. Joannes Mongardini, and Dalmacio Benicio

instrument would vary to satisfy the government budget constraint each period, while all other fiscal variables are held at their original steady states. For example, when government consumption adjusts alone in response to a SACU transfer reduction, government investment, transfers, and all tax rates do not change while government consumption falls to balance the budget. 13 Multiple-instrument strategies 24. The following multiple-instrument strategies are also considered: Increasing the consumption tax rate and cutting government consumption . The consumption

Olivier Basdevant

their original steady states. For example, when government consumption adjusts alone in response to a SACU transfer reduction, government investment, transfers, and all tax rates do not change while government consumption falls to balance the budget. 24 Government consumption cut implies the following: Inflation falls in the short run. Because of nominal price rigidities, the supply of non-traded goods contracts in response to lower demand. This contraction causes a decline in labor demand, which contributes, in turn, to a decline in real wages. With lower real

Olivier Basdevant
Following the onset of the global economic crisis in 2008, SACU member countries have witnessed a significant growth slowdown, and a deterioration of their fiscal balances. This paper (i) assesses options for the design of the needed fiscal consolidation, and (ii) discussed medium-term fiscal policy rules that would help maintain a sound fiscal stance once consolidation has taken place. The main messages are: (i) government consumption cuts appears to minimize the negative impact on growth, and would be appropriate given the relatively large size of the public sector in each country, (ii) fiscal rules could be of particular interest for SACU members notably, a new customs revenue-sharing formula, procedural rules to strengthen budget process, and numerical rules at the national level.
International Monetary Fund

. 6. The rule-based fiscal and monetary policies aim to smooth the economic cycle and maintain stability . Fiscal policy aims to stabilize the budget balance around a chosen structural target; cyclically higher/lower revenue lead to higher/lower target headline balance. Government consumption adjusts to achieve the target given the effect of economic activity on revenue. Monetary policy operates in an inflation-targeting framework, guided by the usual inflation-forecast-based rule where the policy interest rate responds gradually to deviation of projected inflation

International Monetary Fund
This Selected Issues paper discusses the policy response by a sample of central banks to the ongoing oil and food price shocks in South Africa, drawing some lessons, which can help put in context developments in the country. The paper discusses first- and second-round effects of “supply shocks,” and attempts to gauge second-round effects in South Africa. The paper also analyzes the factors that have constrained South Africa’s growth since the end of apartheid, by comparing its GDP components and its saving and investment performance with those of a panel of faster-growing countries.