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| dc.title | A Tool for Fiscal Policy Planning in a Medium-Term Fiscal Framework: The FMM-MTFF Model |
| dc.contributor.author | Suescún, Rodrigo |
| dc.contributor.orgunit | Fiscal Management Division |
| dc.coverage | Peru |
| dc.coverage | Colombia |
| dc.coverage | Latin America and the Caribbean |
| dc.date.available | 2018-10-29T00:00:00 |
| dc.date.issue | 2018-10-26T00:00:00 |
| dc.description.abstract | This paper describes the FMM-MTFF model, a dynamic stochastic general equilibrium model developed by the Fiscal Management Division (FMM) of the Inter-American Development Bank (IDB) to support the implementation of a medium-term fiscal framework (MTFF) in emerging market and developing economies. Relative to existing models, the present model incorporates several non-standard features. First, fiscal policy is defined in terms of multi-year fiscal plans, instead of restricting attention to univariate, single-period fiscal shocks. Second, the model does not impose the straightjacket of a standard fiscal rule. Under a standard fiscal feedback rule, fiscal policy is countercyclical and sustainable by design and any fiscal challenge is mechanically addressed. Third, the model is calibrated to match a three-sector, stylized version of a country’s input-output (I-O) table, which provides a consistent framework on industry output, intermediate input flows, and final demand use data. Fourth, the model embeds a more realistic GDP measurement framework, one that is consistent with what national account compilers do. The model uses a chain-linking method to aggregate real GDP. The model is calibrated to Colombian and Peruvian data to illustrate the use of the model as a tool to quantify the scale of the fiscal challenges, provide consistent medium-term macro fiscal projections, and assess the quantitative implications of past reforms and alternative fiscal policy plans on the economies, that is, the typical questions of interest to an MTFF. |
| dc.format.extent | 55 |
| dc.identifier.doi | http://dx.doi.org/10.18235/0001372 |
| dc.identifier.url | https://publications.iadb.org/publications/english/document/A-Tool-for-Fiscal-Policy-Planning-in-a-Medium-Term-Fiscal-Framework-The-FMM-MTFF-Model.pdf |
| dc.language.iso | en |
| dc.medium | Adobe PDF |
| dc.publisher | Inter-American Development Bank |
| dc.subject | Fiscal Sustainability |
| dc.subject | Fiscal Policy |
| dc.subject | Import |
| dc.subject.jelcode | E62 - Fiscal Policy |
| dc.subject.jelcode | F41 - Open Economy Macroeconomics |
| dc.subject.jelcode | H68 - Forecasts of Budgets, Deficits, and Debt |
| dc.subject.jelcode | Q33 - Resource Booms |
| dc.subject.keywords | natural resources;Fiscal policy;commodity boom;developing countries;fiscal policy plans;FMM-MTFF;medium-term fiscal framework |
| dc.type | Technical Notes |
| idb.identifier.pubnumber | Technical Notes |
| idb.operation | RG-T3001 |