Stock-Flow Adjustments, Government’s Integrated Balance Sheet and Fiscal Transparency

March 7, 2013

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Format: Chicago

Mike Seiferling. Stock-Flow Adjustments, Government’s Integrated Balance Sheet and Fiscal Transparency, (USA: International Monetary Fund, 2013) accessed December 30, 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 re-examines the stock-flow discrepancies of government debt and deficits and correlation with fiscal transparency. Applying the fully integrated relationship between financial stocks and flows allows for a more refined analysis of the deterministic components that make up the ‘stock-flow’ residual. Using partial measures of these stock-flow residuals, several empirical studies have found them to be significantly correlated with fiscaltransparency, inflation, fiscal rules, and banking crisis. Using fully integrated public finance data from the IMF Government Finance Statistics Yearbook for a sample of 22 countries, the findings in this paper suggest that stock-flow residuals have a significantly smaller magnitude than previously assumed and are, in fact, not correlated with fiscal transparency. A stronger determinant of fiscal transparency scores appears to be the actual reporting of fiscal data covering general government, especially a full financial balance sheet.

Subject: Economic and financial statistics, Financial institutions, Financial statements, Fiscal transparency, Government finance statistics, Public debt, Public financial management (PFM), Stocks

Keywords: Adjustment identity, Balance sheet, Balance sheet approach, Financial statements, Fiscal transparency, Government finance statistics, Gross debt, Nonstructural debt reduction, Public finance, Stock flow adjustments, Stock-flow adjustment, Stock-flow residual, 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. 2013/063
Stock No:

WPIEA2013063
ISBN:

9781475537642
ISSN:

1018-5941

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