BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
Quasi-fiscal operations of central banks in transition economies
Abstract: This paper reviews issues associated with quasi-fiscal
operations (QFO) of central banks in a sample of countries in Central and
Eastern Europe and the former Soviet Union. The concern is the problem of
transparency in fiscal and monetary accounts when the central bank
undertakes quasi-fiscal operations and the government falls short of
providing full coverage of fiscal operations. QFO can also jeopardize
monetary policy designed to maintain price stability. A simple framework is
developed to estimate the extent of QFO. In some cases, the magnitude of
QFO is significant in indicating underestimation of fiscal deficit figures.
We claim that the lack of transparency in fiscal accounts of transition
countries warrants serious concern.
Keywords: quasi-fiscal operations; transition economy and transparency; (follow links to similar papers)
43 pages, April 18, 2001
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