Description |
1 online resource (34 pages) : color illustrations |
Series |
IMF working paper ; WP/13/133 |
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IMF working paper ; WP/13/133.
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Contents |
Cover; Contents; I. Introduction; II. Afghanistan's Economic Landscape; III. Macroeconomic Model; A. Household Sector; 1. Savers; 2. Hand-to-mouth Consumers; 3. Aggregation; B. Domestic Producers; C. Imports; D. Exporters; E. Financial Intermediaries; F. Monetary Policy; G. Government; 1. Government Agency: Public-services Producer; 2. Treasury; H. The Rest of the World; I. Market Clearing; IV. Security and Infrastructure Investment in the Long and Short Run; A. Baseline Calibration; B. Structure of Public Services; C. Public Investment Multipliers; D. Impact of Government Spending Shock |
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v. Fiscal ExperimentsA. Shortfall in Foreign Donors' Aid; B. Shortfall in Tax Revenues; C. Results Discussion; VI. Conclusion; References; Tables; 1. Baseline Calibration; 2. Baseline GDP Rations (in percent); 3. Selected Fiscally Relevant Long-run Multipliers; Charts; 1. Model Schematics; 2. Importance of Security, Output and Consumption; 3. The Effects of Changing Structure of Public Services; 4. The Effects of Depreciation on the Supply of Public Services; 5. Impact of Government Spending Shock; 6. Fiscal Response to Consumption Shock |
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7. Public Finance Response to a Permanent 50 Percent Cut in Foreign Aid8. Real Economy Response to a Permanent 50 Percent Cut in Foreign Aid; 9. Public Finance Response to a Permanent Decline in Tax Revenues; 10. Real Economy Response to a Permanent Decline in Tax Revenues |
Summary |
For Afghanistan, the dual prospect of declining donor support and high ongoing security spending over the medium term keeps the government budget tight. This paper uses a general equilibrium model to capture the security-development tradeoff facing the government in its effort to rehabilitate macroeconomic stability and welfare. In particular, it considers strategic policy options for counteracting and minimizing the negative macroeconomic impact of possible aid and revenue shortfalls. We find that the mobilization of domestic revenues through changes in tax policy is the preferred policy response for Afghan central government. Such a response helps to place its finances on a sustainable path and preserve most of the growth potential. Cutting expenditures balances public finances, but causes the economy to permanently shrink. Debt financing helps to preserve much of the economy size but can jeopardize the sustainability of public finances |
Notes |
"May 2013." |
Bibliography |
Includes bibliographical references |
Notes |
Online resource; title from PDF caption title (IMF, viewed September 4, 2013) |
Subject |
Social security -- Afghanistan
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Social security
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Afghanistan
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Form |
Electronic book
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Author |
International Monetary Fund, issuing body.
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ISBN |
1299678300 |
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9781299678309 |
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1484335929 |
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9781484335925 |
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9781484320150 |
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1484320158 |
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9781484320587 |
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1484320581 |
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