This 2003 Article IV Consultation highlights that Canada’s strong policy framework has brought impressive economic results, and the Canadian economy has proven exceptionally resilient in the face of the recent global downturn. Economic activity slowed relatively modestly in 2001, with...

Could a West African monetary union (either of the non-CFA countries, or all ECOWAS members) be an effective "agency of restraint" on fiscal policies? We discuss how monetary union could affect fiscal discipline and the arguments for explicit fiscal restraints considered in the European Monetary...

Fiscal decentralization is likely to entail a bias in the budget process toward higher public expenses and deficits. The paper reviews lessons drawn from the theoretical literature and international experience on the design of intergovernmental relations. The institutional setup should address...

This paper discusses the foundations for a medium-term fiscal framework for Bulgaria, a transition economy aspiring to join the European Union. The paper argues that a well-designed framework can help to enhance the credibility of macroeconomic policies and facilitate preparations for EU...

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...

This paper compares constraints on the public debt with constraints on the primary deficit. The analysis takes into account how an optimizing government reacts to the different constraints when deciding on a spending and borrowing plan. We find that the economy behaves similarly under both...

A new aggregation scheme used to measure the sources of fiscal financing of indebted countries suggests that there was a fundamental improvement in the seniority of domestic debt at the expense of foreign bank debt during the late 1980s. We argue that this was the revenue maximizing response of...

In this paper we use a simple model to analyze the forces which determine the size of the public sector and the quality of workers employed in that sector. Workers are heterogeneous, and the public sector chooses an employment strategy which maximizes a social welfare function $U(s,Y)$ which...