Structural Balances and Revenue Windfalls: The Role of Asset Prices Revisited
By R. Morris, Ludger Schuknecht. Social Science Research Network, 2007
132 citations recorded by the source corpus.
In this paper we revisit one of the “missing links” between budget balances and the economic cycle, namely the impact of asset prices on fiscal revenues. We estimate revenue elasticities with respect to equity and real estate price indices for 16 OECD countries, as well as for a synthetic euro area aggregate. For a sub-sample of euro area countries, we use these elasticities to investigate the impact of asset prices on budget balances and the assessment of the fiscal stance by adjusting existing estimates of cyclically adjusted balances for the asset price “cycle”. The results support the view that asset price movements are a major factor behind unexplained changes in the cyclically adjusted balance, which, if not accounted for, can lead to erroneous conclusions regarding underlying fiscal developments. JEL Classification: H2, H6, E6, G1
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/4dc002547f8c020c7662c06a8e743f535467f6ed
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In Economics and Econometrics
Citations in the corpus
- How does fiscal policy react to wealth composition and asset prices (2012, background): “…should be adjusted for the asset price cycle in addition to the business cycle (Schuknecht and Eschenbanch, 2002; Jaeger and Schuknecht, 2007; Morris and Schucknecht, 2007; Tujula and Wolswijk, 2007) and take into account the occurrence of nancial and banking crises (Schuknecht and…”
- A New Action-Based Dataset of Fiscal Consolidation (2011, unknown): “2 For a further discussion of the pitfalls of using cyclically-adjusted fiscal data, see, for example, Romer and Romer (2010), Milesi-Ferretti (2009), Morris and Schuknecht (2007), and Wolswijk (2007). interview.”
- Fi S cal F oreca S ting le SS on S F rom the literature an D challenge S 1 (2007, unknown): “For example, fiscal developments in the US and Europe have been systematically more favourable than initially expected over the past few years (Swiston et al., 2007, Morris and Schuknecht, 2007, European Commission, 2007).”