Fiscal Transparency and the Performance of Government Financial Assets

January 22, 2015

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Format: Chicago

Mike Seiferling, and Shamsuddin Tareq. Fiscal Transparency and the Performance of Government Financial Assets, (USA: International Monetary Fund, 2015) accessed November 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Stock-flow adjustments are typically measured as the difference between changes in gross debt and deficits. These are interpreted as a proxy for unexplained fiscal discrepancies, and often associated with a lack of fiscal transparency. However, such measures fail to capture the role of financial assets and valuation changes and therefore do not correctly predict fiscal transparency. The purpose of this paper is to provide a more detailed exposition of stock-flow residuals and the relationship with fiscal transparency, highlighting government acquisition of equities and investment fund shares and their performance in secondary markets. The results suggest that the performance of government equity portfolios correlates with fiscal transparency to the extent that fully transparent governments are expected to generate between 6 and 8 percent higher returns on their equity portfolios than others. These findings suggest that the performance of government assets may be a promising area for future research of fiscal transparency and stock-flow residuals.

Subject: Financial institutions, Financial markets, Financial statements, Fiscal transparency, Public financial management (PFM), Securities, Stock markets, Stocks

Keywords: Equity portfolio, Financial statements, Fiscal transparency, General government financial asset volume change density, Government equities portfolio, Government financial assets, Government portfolios of equities and investment fund shares, Gross debt, Holding gains on government financial assets, Net acquisition, Public finance, Securities, Stock markets, Stock-flow adjustments, Stocks, WP

Publication Details

Pages:

25
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2015/009
Stock No:

WPIEA2015009
ISBN:

9781498353953
ISSN:

1018-5941

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