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Indicators of Fiscal Policy: a Reassessment. OECD ECONOMIC STUDIES, WP 78.



During the past decade, the formulation of fiscal policy has been increasingly focused on medium-term considerations associated with public debt and economic efficiency. In this regard, this paper, and the ones by Olivier Blanchard and Edward Gramlich in the same Working Paper Series, considers the implications of this development for the overall appraisal of fiscal policy in OECD countries. The paper begins with a review of the existing measure of discreationary change in the budget positions and proposes refinements of it. The paper then introduces and illustrates several new indicators designed to help assess the sustainability of policies in the short- and medium-run and their first-round impacts on aggregate demand.