This document presents a methodology for the calculation of the Structural Balance of the Public Sector and its application to the Peruvian economy during the period 1990-2002. There are two objectives for this research effort. First, it permits the evaluation of the economic authority's behavior during the period under analysis. Second, it allows the specification of a rule for fiscal policy. This rule is embedded into a general equilibrium model.The results obtained show that the Central Government management of its accounts can be characterized as pro-cyclical between 1990 and 1997 and counter-cyclical for the period 1996-2001. However, the results for the second and third quarter of 2002 show preliminary evidence of a change in fiscal policy towards a pro-cyclical pattern.Finally, and as expected, the incorporation of a fiscal rule into the general equilibrium model results in change...

This document presents a methodology for the calculation of the Structural Balance of the Public Sector and its application to the Peruvian economy during the period 1990-2002. There are two objectives for this research effort. First, it permits the evaluation of the economic authority's behavior during the period under analysis. Second, it allows the specification of a rule for fiscal policy. This rule is embedded into a general equilibrium model. The results obtained show that the Central Government management of its accounts can be characterized as pro-cyclical between 1990 and 1997 and counter-cyclical for the period 1996-2001. However, the results for the second and third quarter of 2002 show preliminary evidence of a change in fiscal policy towards a pro-cyclical pattern. Finally, and as expected, the incorporation of a fiscal rule into the general equilibrium model results in chan...