Estimation of the structural Fiscal Balance in Nicaragua for the period 1994-2016

Abstract

The article presents the estimation of a structural fiscal balance indicator for Nicaragua. For this, the general methodology proposed by IMF was used, to achieve this purpose they estimated two econometric models, the first to determine the elasticity of tax revenues and the second for the current expenditure elasticity with respect to the Real National Gross Domestic Product and also used the Hodrick-Prescott filter to estimate Potential GDP, the data were obtained from the Statistical Yearbook of the Central Bank of Nicaragua. The structural fiscal balance estimated empirically has the same behavior as the gap between effective product and potential, in addition it is inferred that the result of fiscal policy obeys to a structural component of economic activity