Got Fiscal Space?
2,595 views · Published 25 June 2018 · 1:10 · Indexed 29 October 2026
Channel: IMF · 2018 · News & Politics
How much leeway countries have for increasing spending or cutting taxes is a difficult but critical question. It matters both during economic downturns, when the government may look to stimulate the economy, as well as cyclical upswings, since the answer is critical to understanding how fast fiscal buffers should be rebuilt. For the answer to be useful, it needs to come in the form of an estimate of “fiscal space,” or the amount of room a country has for temporarily increasing its budget deficit without jeopardizing its access to markets or the sustainability of its public debt. IMF staff have developed a new framework for measuring this fiscal space, which is illustrated in this video.
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