Author(s): Gilles Mourre, Caterina Astarita and Savina Princen
The cyclically-adjusted budget balance (CAB) is the backbone of the EU framework of fiscal surveillance, both in its preventive and corrective arms. The concept corresponds to the budget balance prevailing if the economy was running at potential. After correcting for the one-off and temporary measures, it is called structural budget balance and used to assess the fiscal policy stance. This paper presents the EU methodology for computing the CAB. It derives the new value of the budgetary semi-elasticities following the recent revision of individual revenue and expenditure elasticities by the OECD and shows the effect of the revised elasticities on the CAB.
|KC-AI-14-536-EN-N (online)||KC-AI-14-536-EN-C (print)|
|ISBN 978-92-79-35185-3 (online)||ISBN 978-92-79-36151-7 (print)|
|doi: 10.2765/71756 (online)||doi: 10.2765/81338 (print)|
Economic Papers are written by the staff of the Directorate-General for Economic and Financial Affairs, or by experts working in association with them. The Papers are intended to increase awareness of the technical work being done by staff and to seek comments and suggestions for further analysis. The views expressed are the author’s alone and do not necessarily correspond to those of the European Commission.