UN Department of Economic and Social Affairs (DESA) Working Papers

The UN Department of Economic and Social Affairs (DESA) Working Papers aim to stimulate discussion and critical comment on the broad range of economic, social and environmental issues associated with the United Nations Development Agenda.


Towards a More Comprehensive Assessment of Fiscal Space

The prolonged sluggishness in the world economy since the global financial crisis has led to growing calls for a reorientation of macroeconomic policies toward more supportive fiscal measures. Such calls inevitably invite the question of how much fiscal space governments actually have. This paper provides a systematic review of the most popular definitions and measures of fiscal space. It examines the evolution of fiscal space measures and discusses the pros and cons of each measure. It then outlines several key factors that could help to further strengthen existing approaches and allow a more comprehensive assessment of fiscal space. By illustrating how different measures paint considerably different pictures of an economy’s fiscal space, the paper underscores the need to use a dashboard of indicators.


Keywords: debt sustainability, Fiscal space, quantitative measures of fiscal space
JEL: E62: Macroeconomics and Monetary Economics / Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook / Fiscal Policy; H63: Public Economics / National Budget, Deficit, and Debt / National Debt; Debt Management; Sovereign Debt; H60: Public Economics / National Budget, Deficit, and Debt / National Budget, Deficit, and Debt: General; C82: Mathematical and Quantitative Methods / Data Collection and Data Estimation Methodology; Computer Programs / Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
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