But there might also be political reasons that make it infeasible to raise taxes. [4] Certainly, the actual fiscal limit is highly uncertain in many ways: it is a probability distribution rather than a point and depends on expectations, shocks and policy measures taken.
One key factor that may have played a role in the past three years is the decline in import prices, reflecting the dollar’s surge, especially in 2015. By contrast, in the 2004 07 period, non-oil import prices increased at roughly a 2 percent annual rate and had a more neutral effect on inflation.