UCL Discovery
UCL home » Library Services » Electronic resources » UCL Discovery

Updating the UK’s code for fiscal stability

Emmerson, C.; Frayne, C.; Love, S.; (2004) Updating the UK’s code for fiscal stability. (IFS Working Papers W04/29). Institute for Fiscal Studies: London, UK. Green open access

[thumbnail of 2853.pdf]
Preview
PDF
2853.pdf

Download (1MB)

Abstract

The 1998 Code for Fiscal Stability sets out the framework within which UK fiscal policy is now set. While having such a code does not make it easier for a Government to meet its fiscal objectives, it may improve the economic credibility of the policy process. To date the Code has generally worked well, and in any case many of the Treasury’s practices exceed the minimum requirements of the Code. However, improvements could be made in the light of recent experiences. In particular it would be preferable for less emphasis to be placed on the precise forecasts for fiscal aggregates and greater emphasis to be placed on the magnitude of the risks to those forecasts. Using the projections contained in the March 2004 Budget, and information on the size of errors made in the past, we estimate that there is now a 60% chance that the Chancellor’s “golden rule” will be met without further tax increases or spending cuts. This compares to 74% for the forecast made by the Treasury 12 months earlier. As well as clarifying how cautious forecasts are, the uncertainty surrounding projections for fiscal aggregates also has implications for the way in which progress towards any fiscal rules should be interpreted.

Type: Working / discussion paper
Title: Updating the UK’s code for fiscal stability
Open access status: An open access version is available from UCL Discovery
Publisher version: http://www.ifs.org.uk/wps/wp0429.pdf
Language: English
Keywords: JEL classification: E62, H62
UCL classification: UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/2853
Downloads since deposit
1,052Downloads
Download activity - last month
Download activity - last 12 months
Downloads by country - last 12 months

Archive Staff Only

View Item View Item