Fiscal Adjustments: Determinants and Macroeconomic Consequences
IMF Working Papers, July 1, 2007
Source details
- Canonical URL
- Fiscal Adjustments: Determinants and Macroeconomic Consequences
Other formats
Bibliographic details
- Authors: Alexander Plekhanov, Manmohan S. Kumar, Daniel Leigh
- Published: July 1, 2007
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451867428.001
Study overview and methodology
- Authors: Alexander Plekhanov, Manmohan S. Kumar, Daniel Leigh
- Publication date: July 1, 2007
- Format and identifiers:
- Pages: 38
- Volume: 2007
- Issue: 178
- Series: Working Paper No. 2007/178
- DOI: https://doi.org/10.5089/9781451867428.001
- Stock No: WPIEA2007178
- ISBN: 9781451867428
- ISSN: 1018-5941
- Methods used:
- Fourteen case studies
- Panel data for OECD countries
- Simulations using a non-Ricardian multi-country dynamic general equilibrium model
Key findings
- Short-run effects:
- Fiscal consolidations tend to have short-run contractionary effects.
- Long-run effects:
- Fiscal consolidations can be expansionary in the long run, provided that they do not rely excessively on cuts in productive government expenditure.
- International spillovers:
- Fiscal consolidations can create positive spillover effects for the rest of the world.
Policy-relevant conclusions
- Design of consolidation:
- Avoid excessive reliance on cuts in productive government expenditure to preserve the potential for long-run expansionary outcomes.
- Externalities:
- Well-designed fiscal adjustments in OECD countries may generate positive spillovers for other economies.
Subject classification and keywords
- Subjects: Expenditure, Fiscal consolidation, Fiscal policy, Public debt, Revenue administration
- Keywords include: approval rating, coalition government, country, fiscal adjustment, Fiscal consolidation, Global, government, government action, government debt, government participation, government purchase, government purchases of goods and service, government saving, government transfer, minority government, non-Ricardian model, OECD country experience, open economy, wage bill, WP
Editorial note
- Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.
Source: IMF Working Paper "Fiscal Adjustments: Determinants and Macroeconomic Consequences", Alexander Plekhanov, Manmohan S. Kumar, Daniel Leigh, July 1, 2007.