Fiscal and quasi - fiscal deficits, nominal and real : measurement and policy issues
de Rezende Rocha, Roberto
The paper reviews alternative definitions of the non-financialpublic sector deficit. Important points giving rise to different definitions are the problem of foreign exchange losses, the appropriateness of including net government lending to the private sector and the distinction between nominal and real deficits. The paper also introduces alternative definitions of quasi-fiscal deficit, and discusses the same issues in the context of these definitions. Foreign exchange losses and the distinction between nominal and real deficits are discussed in greater detail, since these issues are even more relevant in the case of the central bank. The authors also merge the accounts of the non-financial and financial public sector into a consolidated budget constraint. Then the analysis of fiscal and quasi-fiscal deficits are illustrated through a detailed examination of some stylized cases. Finally, the authors provide a summary of major issues and some conclusions are derived from them.
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