Modeling Optimal Fiscal Consolidation Paths in a Selection of European Countries
IMF Working Papers, July 1, 2011
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- Modeling Optimal Fiscal Consolidation Paths in a Selection of European Countries
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Bibliographic details
- Authors: Daniel S Kanda
- Published: July 1, 2011
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781462302208.001
Scope and purpose
- Develops an inter-temporal model for a number of countries: Italy, Netherlands, the United Kingdom, Germany, Ireland, and France.
- Elicits implied country-preferences over balancing the conflicting objectives of fiscal consolidation and reduction of economic slack.
Key findings
- The model suggests that some front-loading of adjustment is desirable, although the extent would vary by country preferences.
- Proposed consolidations may prove to be stronger than acceptable, especially if somewhat larger than anticipated fiscal multipliers lead to a sizeable economic deceleration.
Subject areas and keywords
- Subjects: Fiscal consolidation, Fiscal multipliers, Fiscal policy, Fiscal stance, Fiscal sustainability, Output gap, Production
- Keywords: a number of country, associated output gaps, country circumstances, country preference, debt-GDP ratio rise, Fiscal consolidation, Fiscal multipliers, Fiscal stance, Fiscal Sustainability, France, Germany, Global, implied country-preference, Ireland, Italy, Netherlands, Output gap, sustainability gap, U.K., WP