IMF Working Papers

Fiscal Consolidation: Taking Stock of Success Factors, Impact, and Design

By Vybhavi Balasundharam, Olivier Basdevant, Dalmacio Benicio, Andrew Ceber, Yujin Kim, Luca Mazzone, Hoda Selim, Yongzheng Yang

March 17, 2023

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Vybhavi Balasundharam, Olivier Basdevant, Dalmacio Benicio, Andrew Ceber, Yujin Kim, Luca Mazzone, Hoda Selim, and Yongzheng Yang. Fiscal Consolidation: Taking Stock of Success Factors, Impact, and Design, (USA: International Monetary Fund, 2023) accessed December 4, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Surges in public debt in many countries since the COVID-19 pandemic have rekindled interest in fiscal consolidations, which often entail difficult policy choices in the face of economic and political constraints. This paper presents findings from a survey of the literature on fiscal consolidations, focusing on the pre-existing conditions, impact and design aspects of past consolidation episodes. These findings provide insight into factors that influence the chance of successful consolidations, their growth and distributional impact, the pace, phasing, duration and policy mix of reforms to mitigate the impact, and the role of fiscal institutions and capacity development in successful consolidations.

Subject: Expenditure, Fiscal consolidation, Fiscal policy, Inflation, Prices, Public debt

Keywords: Debt ratio, Expenditure measure, Fiscal Consolidation, Global, Government spending, Inflation, Institutions, Literature finding, Real value, Revenue reform, Self-defeating fiscal consolidations, Spending cut, Taxation

Publication Details

  • Pages:

    39

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2023/063

  • Stock No:

    WPIEA2023063

  • ISBN:

    9798400235221

  • ISSN:

    1018-5941

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