Archive for July 2nd, 2009

Public Finance Resources

July 2, 2009

The main issue for India in its Union Budget 2009-10, is to make a plan to consolidate its finances. The Government has to not just decide when to begin consolidating but also lay a credible path for the same. 

I found a couple of resources to understand more on public finances.

European Commission publishes a report on EU finances every year. Each year there is a different theme.

  • 2000 The Stability and Growth Pact one year on. Focus on taxation in the EU.

  • 2001 Fiscal policy and cyclical stabilisation in EMU. The quality and sustainability of public finances.

  • 2002 Public expenditure in EU countries. Is there a role for discretionary fiscal policy in EMU?Key budgetary issues for the candidate countries of central and eastern Europe.

  • 2003 Public investment and its interaction with the EU’s budgetary rules. Can fiscal consolidations in EMU be expansionary? Meeting the EU’s budgetary requirements: national expenditure rules and fiscal relations across levels of government.

  • 2004 The benefits of fiscal discipline. The quality of public finances: What role within the EU framework for economic policy coordination?

  • 2005 Structural reforms and budgetary objectives. Fiscal challenges during convergence in the recently acceded Member States.

  • 2006 National numerical fiscal rules and institutions for sound public finances. Fiscal policy in good times.

  • 2007 How to stick to medium-term budgetary plans. Lessons from successful fiscal consolidations.

  • 2008 The quality of public finances and growth: a conceptual framework. The efficiency of tax systems.

  • 2009 The fiscal costs of financial crises: past evidence and implications for today’s crisis. Public finances in booms and busts.

  • All are quite useful. From Indian perspective reports of 2006, 2007 and 2009 should be useful.

    PFM Blog also points to useful advice from Goran Persson, who stitched Swedish public finances after 1990 crisis. It also has an interview of Richard Allen, the PFM expert at IMF.  I reviewed his excellent paper on the issues here.

    Small Lessons from a Big Crisis

    July 2, 2009

    Andrew Haldane is becoming a big hit for ME. His speeches not just carry great insights but is full of humors as well (see his previous speeches here and here).

    The title of the post is the title of his recent speech. He points to seven lessons:

    • Finance is no golden goose
    • Unless the golden goose is geared
    • Size does matter
    • Banks cannot “pass” a stress test
    • The plumbing worked
    • But some plumbing was missing
    • Banks’ profits were the problem – but are now the solution

    Read the speech for more details. It has great insights on UK’s financial sector as well.

    US deficit in different interest rate scenarios

    July 2, 2009

    CBO has released a short analysis of US deficit in future under different interest rate scenarios.

    Under each scenario, interest costs would be higher than CBO estimated in its analysis of the President’s budget (see Table 2). The effects would be minimal for 2009, but between 2010 and 2019 interest payments in under both scenarios 1 and 3 would be about $1.3 trillion higher; in scenario 2, interest payments would be $5.6 trillion higher. The cumulative deficit and debt held by the public at the end of the 10-year period would rise by slightly smaller amounts. A small portion of the additional interest payments would be offset by larger remittances by the Federal Reserve on its earnings from holding Treasury securities.

     


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