Timothy C Irwin

• Retired at IMF (Retired)

In its standard form, the intertemporal budget constraint requires the present value of a government's future primary cash surpluses to be at least equal to the value of its outstanding debt. In an effort to help link accrual accounting to fiscal analysis, this paper shows how the constraint can also be expressed in terms of the surpluses and balan...

Public debt is sometimes measured at its market value or amortized cost, the measurement bases prescribed by international accounting standards and statistical guidelines. But an overview of 191 countries and a closer investigation of 19 shows that public debt is most often measured at face value. An analysis of the three measurement bases and the...

The rise in house prices since the turn of the millennium seems likely to have increased the inequality of wealth in New Zealand. On average, house-owners were wealthier than others before the boom, and during the boom real house prices more than doubled. Yet the available data shows little evidence of an increase in inequality in wealth or even of...

Fiscal reporting is intended to warn of fiscal crises while there is still time to prevent them. The financial crisis thus seems to reveal a failure of fiscal reporting: Before the crisis, even government reports on fiscal risk typically did not mention banks as a possible source of fiscal problems. One reason for silence was that the risk arose pa...

When rights and obligations are not recognized as assets and liabilities on a government's balance sheet, the government's deficit can be reduced by selling unrecognized assets or incurring unrecognized liabilities. This paper examines how much has been done in 28 advanced economies since 2003 to recognize assets and liabilities and thus dispel the...

Although the budget deficit and the public debt feature prominently in political debate and economic research, there is no agreement about how they should be measured. They can be defined for different sets of public institutions, including the nested sets corresponding to central government, general government, and the public sector, and, for any...

This paper examines the distribution of taxable personal income in New Zealand during 2000–2012 and finds that it is approximately exponential. Although the exponential Lorenz curve is parameter free (and implies a Gini coefficient of exactly 0.5), it, nevertheless, describes the distribution over the period surprisingly well, despite changes in th...

Although the budget deficit and the public debt feature prominently in political debate and economic research, there is no agreement about how they should be measured. They can be defined for different sets of public institutions, including the nested sets corresponding to central government, general government, and the public sector, and, for any...

Although the budget deficit is much discussed in political debate and economic research, there is no agreement on how it should be measured. There are at least four options, which can be called the cash deficit, the financial deficit, the full-accrual deficit, and the comprehensive deficit. Each is informative, but each has problems of relevance or...

ROC and CAP analysis are alternative methods for evaluating a wide range of diagnostic systems, including assessments of credit risk. ROC analysis is widely used in many fields, but in finance CAP analysis is more common. We compare the two methods, using as an illustration the ability of the OECD’s country risk ratings to predict whether a count...

Accounting devices that artificially reduce the measured fiscal deficit can be analyzed as transactions involving unrecognized assets and liabilities. Different accounting systems recognize different sets of assets and liabilities and are thus vulnerable to different sets of devices. Some devices can be revealed by moving progressively from cash ac...

A government seeking to reduce its deficit can be tempted to replace genuine spending cuts or tax increases with accounting devices that give the illusion of change without its substance, or that make the change appear larger than it actually is. Under ideal accounting standards, this would not be possible, but in real accounting it sometimes is. F...

Making clinical decisions on the basis of diagnostic tests is an essential feature of medical practice and the choice of the decision threshold is therefore crucial. A test's optimal diagnostic threshold is the threshold that maximizes expected utility. It is given by the product of the prior odds of a disease and a measure of the importance of the...

Sapere Research Group and the New Zealand Law Foundation. Neoclassical economics, which assumes rationality and self-interest, has helped analyse many regulations. But a growing body of evidence about judgements, decisions, and preferences casts doubt on the applicability of these assumptions. Drawing on this evidence, behavioural economics can n...

Governments that use public-private partnerships (PPPs) to build infrastructure usually assume contingent liabilities relating, for example, to early contract termination or to debt and revenue guarantees. Deciding whether to assume these liabilities and, if so, determining how to value, monitor, and limit them is difficult for most governments. Th...

When growth-promoting spending is cut so much that the present value of future government revenues falls by more than the immediate improvement in the cash deficit, fiscal adjustment becomes like walking up the down escalator. Although short-term cash flows matter, too tight a focus on them encourages governments to invest too little. Cash-flow tar...

This chapter sets out five things governments can do to monitor and control spending commitments in PPPs: 1. Establish a framework for comparing the cost of PPP commitments with the cost of publicly financed projects. 2. Incorporate the commitments into fiscal monitoring. 3. Improve the reporting of commitments in accounts and budget documents. 4....

Our consulting experiences indicate that many New Zealand businesses and their managers are increasingly aware of the shortcomings of conventional methods for evaluating capital investment projects, particularly in situations where there is considerable flexibility subsequent to the project's commencement. With the busy executive in mind, we offer...

Each year developing countries seek billions of dollars of investment in their infrastructure, and private investors, mostly in rich countries, seek places to invest trillions of dollars of new savings. Private foreign investment in the infrastructure of developing countries would seem to hold great promise. But foreign investors must cope with vol...

Over the life of a typical contract for an infrastructure project—say, 25 years—the value of developing country currencies is likely to fall substantially. Sometimes the decline is gradual, but sometimes it is precipitous. Many contracts have been structured so that taxpayers or customers bear the exchange rate risk. During crises the result has of...

The privatization of infrastructure should lead to the development of new infrastructure, improvements in the operation of existing infrastructure, and a reduction in budgetary subsidies. Whether countries reap the full benefits of privatization, however, depends on how risks are allocated. If, as is often the case in developing countries, governme...

This report is not a step-by-step guide on how to negotiate concessions. Nor is it an attempt to identify model contracts or clauses. Rather, it aims at helping policymakers and their advisers to better understand some of the most important and difficult issues related to the design, award, implementation, monitoring, and modification of concession...

In giving advice, policy analysts have to make many difficult judgments. They need to consider what politicians' objectives are; they need to determine what the policy options are; and they need, crucially, to have an idea of the effects of the different options on the attainment of the politicians' objectives. Arriving at these judgments is diffic...

This Note compares the effects of price cap and rate-of-return regulation on the risks borne by regulated utilities. It presents evidence that price cap regulation subjects firms to greater risks and therefore raises their cost of capital. This result has one clear implication: firms regulated by price caps must be permitted to earn higher returns....