IMF Working Papers

Fiscal Policy Management in an Open Capital Regime

By Peter S. Heller

February 1, 1997

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Peter S. Heller Fiscal Policy Management in an Open Capital Regime, (USA: International Monetary Fund, 1997) accessed November 22, 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

This paper argues that as countries open their capital regimes, the appropriate fiscal stance should become more conservative than when capital is immobile. Further fiscal adjustment may be necessary in the face of large and volatile capital flows. However, the required changes would be smaller. If a fiscal response is unavoidable, some elements of fiscal policy are easier to manipulate and less distortive than others. Determining the actual stance of fiscal policy is more difficult in an open capital regime, underscoring the need for transparency about fiscal rules. A more open capital environment also constrains the sustainable fiscal structure.

Subject: Balance of payments, Capital flows, Capital inflows, Expenditure, Fiscal policy, Fiscal stance

Keywords: Capital flow, Capital flows, Capital inflows, Capital regime, Core expenditure area, Core expenditure function, Core outlay, Expenditure policy, Expenditure responsibility, Expenditure structure, Fiscal policy, Fiscal policy instrument, Fiscal policy maker, Fiscal policy management, Fiscal policy response, Fiscal policy stance, Fiscal policy--tax, Fiscal stance, Globalization, Interest outlay, Southeast Asia, WP

Publication Details

  • Pages:

    35

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 1997/020

  • Stock No:

    WPIEA0201997

  • ISBN:

    9781451922158

  • ISSN:

    1018-5941

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