Good, Bad or Ugly?on the Effects of Fiscal Rules with Creative Accounting [electronic resource] / Gian Milesi-Ferretti.
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TextSeries: IMF Working Papers; Working Paper ; No. 00/172Publication details: Washington, D.C. : International Monetary Fund, 2000Description: 1 online resource (26 p.)ISBN: 1451858566 :ISSN: 1018-5941Subject(s): Budget Deficit | Budget Rule | Budget Transparency | Creative Accounting | Fiscal Rule | Fiscal Rules | ItalyAdditional physical formats: Print Version:: Good, Bad or Ugly?on the Effects of Fiscal Rules with Creative AccountingOnline resources: IMF e-Library | IMF Book Store Abstract: Do fiscal rules likely lead to fiscal adjustment, or do they encourage the use of 'creative accounting'? This question is studied with a model in which fiscal rules are imposed on 'measured' fiscal variables, which can differ from 'true' variables because there is a margin for creative accounting. The probability of detecting creative accounting depends on its size and the transparency of the budget. The model studies the effects on fiscal policy of different rules, separating structural from cyclical effects, and examines how these effects depend on the underlying fiscal distortion and on the degree of transparency of the budget.
Do fiscal rules likely lead to fiscal adjustment, or do they encourage the use of 'creative accounting'? This question is studied with a model in which fiscal rules are imposed on 'measured' fiscal variables, which can differ from 'true' variables because there is a margin for creative accounting. The probability of detecting creative accounting depends on its size and the transparency of the budget. The model studies the effects on fiscal policy of different rules, separating structural from cyclical effects, and examines how these effects depend on the underlying fiscal distortion and on the degree of transparency of the budget.
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