Fiscal 'space'


House price latest

House prices up by 5.2% in year to December 2017.

Read more
Model agencies collude to fix rates

Regulators find leading model agencies guilty of price fixing.

Read more

Rebuilding 'fiscal space'

Faced with weaker export prospects, and a likely rise in global interest rates, developing countries should look to rebuild their ‘fiscal space’, according to a new report just released from the World Bank. The recent fall in oil prices is likely to have created an opportunity for them to do just that.  Many developing countries were forced to implement expansionary fiscal policies to counteract the global slowdown - given the difficulty of implementing a monetary expansion in the face of large public debts. However, there is now less fiscal space to maneuver.

A key finding in the report is that in countries where debt and deficits have increased, any net injection of public spending will contribute less to consumption and national income than it would have prior to the global slowdown because the high debt levels have made the fiscal multiplier effect much weaker. Fiscal multipliers relate to the ratio of a change in output (ΔY) to a discretionary change in government spending or tax revenue (ΔG or ΔT). In simple terms, the fiscal multiplier measures the effect of a change in spending or tax revenue on the level of GDP.  Countries with higher debt levels are  likely to suffer from higher levels of uncertainty and pessimism, and hence lower levels of marginal consumption following more government spending or less taxation.

However, the 'good' news is that the fall in oil prices provides an opportunity for those developing countries relying on imported oil to rebuild their 'fiscal buffers' given that their governments have less need subsidise imports of oil. Such subsidies represent a large drain on public finances.

The report goes on to suggest that well-designed mechanisms, such as fiscal rules, stabilisation funds, and medium-term expenditure frameworks, will help rebuild the fiscal buffers and enable developing countries to better withstand future global shocks.

The study on fiscal space is available at

For more reading, go to a recent IMF working paper on fiscal multipliers.


Alternative finance

Report on the growth of alternative finance.

Read more
GDP latest

UK grows by 0.3% in 1st quarter of 2017.

Read more
Customs unions

Costs and benefits of customs unions.

Read more
New materials

Multiple choice papers for Paper Three.

Read more
Brexit update

Article 50

What trading options are available to the UK?

Savings ratio

Savings ratio falls to lowest level on record.

Read more
Tax avoidance

Double Irish - and a Dutch Sandwich more..

The OECD presents its final package for reform of international tax rules..more

OECD - reducing income inequality will boost growth..more