The Treasury

Global Navigation

Personal tools

You are here: Home > Publications > Research and Policy > Working Papers > 2001 > A Structural VAR Approach to Estimating Budget Balance Targets (WP 01/11)

Treasury
Publication

A Structural VAR Approach to Estimating Budget Balance Targets - WP 01/11

Publication Details

  • A Structural VAR Approach to Estimating Budget Balance Targets
  • Published: Dec 2001
  • Status: Current
  • Authors: Buckle, Bob (Robert) A; Kim, Kunhong; Tam, Julie
  • JEL Classification: C51; E62; H61
  • Hard copy: Available in PDF format only.
 

A Structural VAR Approach to Estimating Budget Balance Targets

New Zealand Treasury Working Paper 01/11

Published Dec 2001

Authors: Robert A Buckle, Kunhong Kim & Julie Tam

Abstract

The Fiscal Responsibility Act 1994 states that, as a principle of responsible fiscal management, a New Zealand government should ensure total Crown debt is at a prudent level by ensuring total operating expenses do not exceed total operating revenues. In this paper a structural VAR model is estimated to evaluate the impact on the government's cash operating surplus (or budget balance) of four independent disturbances: supply, fiscal, real private demand, and nominal disturbances. Based on the distribution of these disturbances, stochastic simulations are undertaken to derive the level of the ex ante cash budget balance needed to achieve an actual cash budget balance, at a given level of probability, at some future time horizon.

Page top