Fiscal Sustainability in Theory and Practice

Fiscal sustainability analysis is the use of a simple set of tools to analyze a government's budget and its debt position, and leads to conclusions - given the government's debt level - about the appropriateness of fiscal policy. Many economists are familiar with fiscal sustainability analysis, but there is no single reference work that explains it. Fiscal Sustainability in Theory and Practice fills this gap. The handbook is organized around three themes: (i) basic theory and tools for everyday use, (ii) the effects of business cycles on public finance and the role of fiscal rules, and (iii) crises and their impact on fiscal sustainability. The first theme is central to the book's purpose of bringing the basic theoretical literature together, along with a set of examples used to illustrate particular methods of analysis. The second and third themes develop the topic of fiscal sustainability further, by extending it to topics at the forefront of policy debates in the recent past. Aimed at economists previously unfamiliar with fiscal sustainability analysis, this book will also serve as a useful reference work for all economists with either an advanced undergraduate or basic graduate level of training.