Public Sector Borrowing Requirement Research Articles

Unintended institutionalization: how the politics of symbolic fiscal practices shapes economic policy

Abstract Sociologists and political economists frequently study the politics of economic ideas, but the official statistics that enable decision-making and shape public debate have been less scrutinized. This article theorizes symbolic fiscal practices—the conceptual and accounting conventions, procedures, techniques and devices underlying official budgetary information—as the object and means of different framing contests. To demonstrate the analytical value of this perspective, the article studies why and how the Public Sector Borrowing Requirement (PSBR) became the headline fiscal indicator of the UK in the 1970s. It argues the PSBR is a case of unintended institutionalization driven by the interplay between bureaucratic and economic-policy framing contests. Budgetary conventions, tables, labels and numbers are political objects. Their production, uses and understandings are neither pure reflections of economic-policy framing contests nor the sole result of bureaucratic framing contests. The politics of symbolic fiscal practices may thus influence economic policy in unexpected ways.

IS THE PUBLIC FINANCE DEFICIT A RISK ON INFLATION IN TURKEY?

Price stability is the goal of economic policy. The policies implemented to achieve this goal can cause various problems such as financing the public deficit in economies. In this study, it is investigated whether public deficit financing has an impact on inflation in the period of 1975-2021 in Turkey. In the analysis, the financing of the public deficit is represented by the public sector borrowing requirement. Since the money to be released to the market due to the public sector borrowing requirement will affect the consumer price index, it has been chosen as the dependent variable. After the stationarity analysis of the series, the causality relationship between the series was investigated with the Toda-Yamamoto causality test. A relationship from inflation indicator to public deficit financing has been determined. The findings of the analysis for the period examined showed that, contrary to the widely accepted opinion in the literature, public deficit financing in Turkey did not cause an inflationary effect.

India at 75: Replete with Contradictions, Brimming with Opportunities, Saddled with Challenges

ABSTRACT: I present a perspective on where the Indian economy stands right now. I acknowledge the contradictions that have arisen given the divergent growth path of urban, formal or (stock-market) listed India relative to rural, informal or unlisted India. I also focus on the country's immense opportunities in expanding the digital footprint of finance to last-mile borrowers. I present novel facts on the rising industrial concentration, drawing out its historical evolution, the channels that have caused it to rise recently, and its implications for product price markups and inflation. I recommend that to restore industrial balance, India increase overall competition by reducing import tariffs and reduce the pricing power of its largest conglomerates. I also propose that to restore macroeconomic balance, India reduce fiscal deficit and public sector borrowing requirements as well as rein in inflation, address gaps in skills and education, and restore female labor force participation.

Enhancing Fiscal Transparency and Reporting in India

Current fiscal transparency and reporting practices in India place it behind most peer G20 economies, implying that policy makers are lacking critical data to ground their fiscal and other economic planning decisions. The increasing use of off-budget financing at the central government level in recent years represents one key example of reduced transparency—we provide estimates of the public sector borrowing requirement and an extended notion of the fiscal deficit, each of which shows a more expansionary stance in recent years than ‘headline’ deficit figures presented in budget documents. We then investigate the current state of fiscal reporting practices in India and suggest areas for reforms—these include enhanced IT systems, stronger central-local coordination, and a gradual transition to accrual accounting.

The Scale Effect of Investments and Tax Incomes intended to Public Sector Borrowing Requirement in Last Period: Turkish Case

In this study, we attempt to put forth the structural dynamics in which the recent changes in the Public Sector Borrowing Requirement, which is an important phenomenon of the public sector, are related. We consider important that the public sector financial balances are affected by many sub-dynamics considering it is important to better understand the impact level of total investment expenditures and tax revenues in the process of changes in the Public Sector Borrowing Requirement (PSBR). However, it is also meaningful to question the changes in the borrowing requirement in the other macro dynamics that constitute the effect level in the process. Therefore, values ​​such as percentage changes in export limits, consumer confidence index and consumption investments in foreign markets were also included in our study. In this study, it was tried to determine the scale effect of the findings within the framework of an econometric model and the results were found to be meaningful as a result of the current interpretation from a financial economics perspective.

An Economic Instrument to Improve the Climate in Sweden

Objectives: The Naturally Optimised Revenue Demand in Communities (NORDIC) model was applied to improve the Swedish climate. When substantial changes in the atmosphere’s temperature occur, the profits can be reduced, creating a strong driving force for authorities to cope with climate change. A new and practical economic instrument was introduced to improve climate management, based on the NORDIC model. Methods: Constructed shadow costs were produced to be inserted into the public accounts. This procedure induced economic incentives to decrease the climate changes. The launched methodology considered the public awareness about climate change issues. This case study provided an example of how to improve the climate in the Swedish society by applying the NORDIC model. Results: The methodology could improve the climate and decrease its fluctuations by using economic instruments. The resulting shadow cost impacted the Public Sector Borrowing Requirement. An introduced key factor expressed, by one digit only, the success of the climate policy. Conclusions: The NORDIC model could improve the Swedish climate and its danger to health. Governments obtain a tool to monitor, manage and evaluate the atmosphere. End users include environmental authorities and politicians that want a climate policy tool. The NORDIC model is recommended to apply to climate issues and raise the public awareness about climate change. Further research focus on algorithms for certain climates and affected citizens.

Enhancing Fiscal Transparency and Reporting in India

Current fiscal transparency and reporting practices in India place it behind most peer G20 economies, implying that policy makers are lacking critical data to ground their fiscal and other economic planning decisions. The increasing use of off-budget financing at the central government level in recent years represents one key example of reduced transparency—we provide estimates of the public sector borrowing requirement and an extended notion of the fiscal deficit, each of which shows a more expansionary stance in recent years than ‘headline’ deficit figures presented in budget documents. We then investigate the current state of fiscal reporting practices in India and suggest areas for reforms—these include enhanced IT systems, stronger central-local coordination, and a gradual transition to accrual accounting.

An Analysis of the Interaction Between Monetary and Fiscal Policies in Brazil

This paper examines monetary and fiscal policy rules in Brazil for the period 2003-2014, based on a New Keynesian Macro Model estimated via GMM System. The main results show an aggregate demand focused on the lagged GDP output and on GDP growth expectations. As for inflation, the use of hybrid Phillips curve, as well as the influence of the exchange rate, seems to be the case for Brazil. Regarding the Taylor Rule, the Central Bank’s reaction is gradual, via interest rate smoothing, and the expected inflation and GDP are important for the determination of the rule. Therefore, monetary policy seems to be counter-cyclical. As for the Fiscal Policy Rule, the dynamics of economic activity leads to a decrease in the public sector borrowing requirement (PSBR), as % of GDP, which is an indication of a counter-cyclical fiscal policy and coordination of economic policies. However, this may only indicate that GDP grows faster than PSBR, and not that the latter is decreasing. As a result, it is not possible to assure that the Brazilian fiscal policy is actually coordinated with the country’s monetary policy. JEL codes : E52, E63, C32 Online Appendix

¿Cómo va minando el entorno petrolero internacional a la economía mexicana?

The impact of Mexico's oil revenues fall during 2015-2016 due to lower international oil prices is analyzed, observing that it affects two areas: the balance of payments and the public finances. Given the fact that the decline has occurred in a period in which international trade grows at slower rates, and Mexico relies too heavily on it, as well as on the inflow of international capitals, the effect on the balance of payments is considerable. Similarly, public finances have suffered the reduction of oil industry taxes participation on total tax revenues from 33% up to 2014 to 18% in 2015-2016, being not the tax reform fully capable to reimburse the government such resources. Therefore, not only the participation of the Public Sector Borrowing Requirement (psbr) in the Gross Domestic Product (gdp) has grown, but in just three years in office, the Peña administration has increased 10 percentage points the public sector debt in terms of gdp. Under these conditions, the pressures of short and medium term on the Mexican economy increases, especially if one considers that expected Foreign Direct Investment (fdi) revenues associated to the energy reform will be postponed and substantially reduced, at least until 2017, and the landing of Federal Reserve's (fed) monetary policy, which will involve at least three increases in the reference interest rate of the United States (us) during 2016, will produce equal or greater increases in Mexico's. This will not only impact the cost of public but also private debt, which disbursement in recent years has grown even faster than that of the public sector.

Financial innovation and monetary control in Italy

Increasingly the pressures of deregulation and competition have promoted innovation in the development of financial instruments. In the case of Italy the pressure for innovation has arisen from the need to finance the public sector borrowing requirement and the effects of inflation. As a result, funding instruments have been switched from longer-term bonds to the shorter-term treasury bill. However, this can lead to excessive supply of liquid assets with consequent problems for monetary controls. Such factors will make it more difficult to use monetary aggregates as a guide to monetary policy in the future.

FISCAL POLICY CONTRADICTION: A PERSPECTIVE ON BRAZIL AND MEXICO

The aim of this paper is to discuss the quality of fiscal policy in Brazil and Mexico and investigate whether fiscal policy influence is favorable to reduce the unemployment rate. Public spending, which has a positive effect on the level of employment when results in additional aggregate demand, may cause a negative effect on employment, if its financing depends on persistent high interest rates. Brazil and Mexico have engaged in a long effort to control public spending and to reduce the public deficit to zero. Does this policy bring a positive result to the economic activity no matter how actual public deficit has been financed? We select variables related to public budget as public sector borrowing requirements, taxes, public debt and others to form a data base. The fiscal institutional arrangement and the data allow us to evaluate the fiscal policy as a who leand to discuss the importance of credibility and reputation of the government.

Enterprise Performance, Privatization and the Role of Ownership in Finland

In both economically developed and developing countries, privatisation, budget austerity measures and market liberalisations have become key aspects of structural reform programs in the last three decades. These three recommended policies were parts of strong revival of classical and newclassical school of thought since the middle of 70s. Such programs aim to achieve higher microeconomic efficiency and foster economic growth, whilst also aspiring to reduce public sector borrowing requirements through the elimination of unnecessary subsidies. For firms to achieve superior performance a change in ownership from public (state ownership) to private has been recommended as a vital condition. To assess the ownership role, the economic performances of private, public and mixed enterprises in Finland is compared through the use of factor analysis method. The extracted factors, using data of two years, 1998 and 2000, do not pick ownership as a key performance factor.

English

One of the fundamental aims of economic policies is to increase capital accumulation in terms of investment that is necessary to maintain a desirable and sustainable growth rate in the developing countries. The majority of empirical studies show that per capita GDP growth, foreign trade, capital flows, external debt, public sector borrowing requirements, inflation and interest rate are the main determinants of investment rate. Recently, there is an increasing emphasis on the role of the financial sector in this process, since a financial system, in essence, mobilizes saving to investment. In particular, it can be argued that a well-functioning and developed financial system may efficiently mobilize available resources for investment. Therefore, the aim of this study is to investigate whether financial development has contributed to an increase in investment in Turkey. To reach an empirical and firm conclusion, an investment function, including the traditional potential determinants along with financial development, is estimated by utilizing the developments in the time series econometrics in terms of unit root tests that allow structural breaks and co-integration for the period 1970-2009 in Turkey.

The inflation protection from indexed bonds

Indexed bonds provide protection against inflation if they are (i) insensitive to revisions of inflation expectations but (ii) adjust one-for-one to unexpected inflation. The sensitivity of British index-linked gilts to unexpected inflation is statistically significant and consistent with a unit response. This protection of British index-linked gilts against a loss of contemporaneous purchasing power is consistent with the view that indexed bonds avoid the inflation risk compensation of conventional bonds. This suggests that issuing indexed instead of conventional government bonds reduces the long-run funding costs of the public sector borrowing requirement.

Il Patto di Stabilitŕ Interno per i Comuni: una valutazione con i certificati dei conti consuntivi

While the Central Government is responsible for the European Stability and Growth Pact, internal coordination among different layers of government is crucial to comply with the European obligation. In this paper the Italian Domestic Stability Pact (DSP) on local authorities is evaluated in terms of its effects on the public sector borrowing requirement from 1999 to 2005. A new data base is used to verify yearly and for each local authority the respect of the Italian DSP. More precisely, the fiscal rule is calculated on official budget data for the whole sample of local authorities tied. The results supply evidence for reconsidering the structure of the DSP in terms of binding fiscal rule, adjustment of structural local budget deficits and international compliance.

Inflation and the Impact of Budgets

This article focuses on the adjustment of budget figures for the effect of inflation on the value of government debt. It asks whether such adjustment improves their performance as a measure of ‘fiscal impact’. If inflation significantly influences the impact of budgets on the real economy, policy-makers may make inappropriate fiscal policy decisions if they are guided by unadjusted budget figures. The article argues that if agents perceive holdings of government debt as part of their wealth, changes in the real value of debt will have an effect on consumption behaviour. Therefore to assess the impact of fiscal policy on consumption it may be necessary to adjust budget figures so that they accurately indicate changes in the real value of debt held by the private sector. This article adjusts a series of structural public sector borrowing requirements (PSBR) for the effect of inflation on the real value of government debt held by the private sector. An empirical analysis concludes that the inflation-adjusted budget series provides a superior measure of fiscal impact on consumption, and hence the real economy.

Dívida pública e estabilidade de preços no período pós-real: explorando relações empíricas

O objetivo do artigo é estudar evidências empíricas para a dinâmica da dívida pública a partir de algumas variáveis que estão relacionadas à busca da estabilidade de preços no período posterior à introdução do Plano Real. Para tanto, é feito um modelo auto-regressivo vetorial (VAR) para analisar as regularidades empíricas provenientes da relação entre: necessidades de financiamento do setor público - juros reais X resultado primário do setor público X câmbio X inflação X dívida pública. Os resultados encontrados denotam que a estabilidade de preços obtida no período não é suficiente para promover reduções no estoque da dívida pública e que é necessário uma nova estrutura de indexação.

Research, knowledge and collaboration Dilemmas of the PFI

Although the Department for Education and Skills' ‘Classrooms of the Future’ and ‘Design Exemplar Initiative’ are to be welcomed (arq 7/3+4, pp244–279), they should not be allowed to obscure the far-reaching issues involved in the Public Finance Initiative (PFI). As a procurement process, PFI represents a massive investment in social programmes and public building projects: the estimated £34 billion in contract or commissioned gives an indication of this. PFI transfers the responsibilities and risks associated with the procurement, delivery and management of public buildings and estates over a period of 25 years to the private sector, and almost none of the expenditure involved is reflected in the Public Sector Borrowing Requirement. This makes it highly attractive to government, but the question remains as to how much it mortgages the nation's future because it merely defers and extends borrowing. If schemes mature at a time of recession or serious budget deficit, the implications could be highly damaging.

Aid and public sector borrowing in developing countries

AbstractThis paper analyses the relationship between public sector borrowing and foreign development aid. It is concerned specifically with the public sector borrowing requirement net of aid, questioning the assumption that aid and this type of borrowing are substitutes for one another. After looking at the public sector budget constraint and various conditions under which aid might lead to an increase in this borrowing, the paper surveys the empirical results of literature on aid and public sector fiscal behaviour. It finds that the results of a number of studies are consistent with aid leading to increases in this borrowing. Further investigation, in the form of econometric analysis of panel data, also points to this outcome. Copyright © 2003 John Wiley & Sons, Ltd.

The Policy Challenge with Floating Exchange Rates: Turkey’s Recent Experience

This paper evaluates the developments in the Turkish economy in light of the Central Bank of Turkey’s (CBT) policies during a recent period of floating exchange rate system (March 2001–July 2003). It is found that the CBT was effective in containing volatility and reducing the average inflation rate while there was a strong recovery of output. However, there are accumulated risks in the economy. Particularly, the extreme appreciation of the Turkish lira during this period and the record level of real interest rates give the impression that the current state of the economy is fragile. Unless the government accelerates the structural reform process and pursues sound fiscal policies to reduce the public sector borrowing requirement and the debt ratio, an adverse shock to the system may trigger a reversal of fortune.