[Title Page]
Contents
I. Introduction 9
II. Fiscal Policy and Economic Fluctuations 12
1. Macroeconomic effects of the fiscal policy 13
2. Macroeconomic impact on fiscal situations 20
III. Fiscal Stance Indicators 24
1. Review of fiscal stance indicators 26
A. Current fiscal balance, consolidated fiscal balance, primary balance, and operating balance 27
B. Cyclically adjusted balance and structural balance 29
C. Measure of fiscal impulse 31
2. Fiscal stance and fiscal effort 33
3. Discretionary fiscal effort(DFE) index 37
4. Adjusting the effects of one-off measures using macroeconomic data 38
IV. Analysis of Countercyclicality of Fiscal Policy 41
1. Estimation of Indicators 41
A. Potential growth rates and output gaps 41
B. Cyclically adjusted balance and structural balance 50
C. Discretionary fiscal effort(DFE) 57
2. Evaluating the counter cyclicality of fiscal policy 61
V. Conclusion 65
Bibliography 66
〈Table II-1〉 Correlation Coefficients between Growth Rates and Standard... 16
〈Table II-2〉 Influences on Fiscal Multiplier Size 19
〈Table III-1〉 Adjustment steps for Economic Fluctuations and Other Factors 30
〈Table IV-1〉 Non-Recurrent Events Significantly Affecting the Fiscal Balance 52
〈Table IV-2〉 Indicators of Economic Situation and Fiscal Stance 63
[Figure I-1] Real GDP Growth Rates of Major Economies 10
[Figure II-1] Correlation between Growth Rates and Macroeconomic Volatility 14
[Figure II-2] Correlation between Growth Rates and Volatility before GFC 15
[Figure II-3] Correlations between Quarterly Economic Growth Rates and... 16
[Figure III-1] Concept of Fiscal Effort 34
[Figure IV-1] Application of the Simple HP Filter 43
[Figure IV-2] Yearly Employment Rates and Estimated Trend 45
[Figure IV-3] Quarterly Employment Rates and Estimated Trend 45
[Figure IV-4] Quarterly Average of Hours Worked per Month and Their Estimated... 46
[Figure IV-5] Annual Average of Hours Worked per Month and Their Estimated... 47
[Figure IV-6] Quarterly Changes in Labor Input and Estimated Trend(Medium... 47
[Figure IV-7] Annual Changes in Labor Input and Estimated Trend(Medium... 48
[Figure IV-8] Comparison of Quarterly Labor Inputs(Medium Population... 49
[Figure IV-9] Comparison of Output Gaps(Medium Population Forecasts) 50
[Figure IV-10] Comparison of One-Off Measures Estimates: Statistics of the Bank... 54
[Figure IV-11] Comparison of Various Estimates of CAB and Structural Balance(SB) 57
[Figure IV-12] Estimates of DFE 59
[Figure IV-13] DFE: Expenditure vs. Revenue vs. Balance 60
[Figure IV-14] Comparison of DFE and Other Fiscal Stance Indicators 60