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Expenditure Reform in Industrialised Countries: A Case-Study Approach

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Author Info
Sebastian Hauptmeier
Martin Heipertz
Ludger Schuknecht

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Abstract

This study examines reforms of public expenditure in industrialised countries over the past two decades. We distinguish ambitious and timid reformers and analyse in detail reform experiences in eight case studies of ambitious reform episodes. We find that ambitious reform countries reduce spending on transfers, subsidies and public consumption. Such expenditure retrenchment is also typically part of a comprehensive reform package that includes improvements in fiscal institutions as well as structural and other macroeconomic reforms. The study finds that ambitious expenditure retrenchment and reform coincides with large improvements in fiscal and economic growth indicators. Copyright 2007 Institute for Fiscal Studies.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1475-5890.2007.00058.x
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Publisher Info
Article provided by Institute for Fiscal Studies in its journal Fiscal Studies.

Volume (Year): 28 (2007)
Issue (Month): 3 (09)
Pages: 293-342
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Handle: RePEc:ifs:fistud:v:28:y:2007:i:3:p:293-342

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Alberto Alesina & Roberto Perotti, 1995. "Fiscal Expansions and Fiscal Adjustments in OECD Countries," NBER Working Papers 5214, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Mark Hallerberg & Rolf Strauch & Jürgen von Hagen, 2004. "The design of fiscal rules and forms of governance in European Union countries," Working Paper Series 419, European Central Bank. [Downloadable!]
    Other versions:
  3. Ronald D. Kneebone & Kenneth J. McKenzie, 1999. "The Characteristics of Fiscal Policy in Canada," Canadian Public Policy, University of Toronto Press, vol. 25(4), pages 483-501, December. [Downloadable!] (restricted)
    Other versions:
  4. Michael Kell, 2001. "An Assessment of Fiscal Rules in the United Kingdom," IMF Working Papers 01/91, International Monetary Fund. [Downloadable!]
  5. Giavazzi, Francesco & Pagano, Marco, 1995. "Non-Keynesian Effects of Fiscal Policy Changes: International Evidence and the Swedish Experience," CEPR Discussion Papers 1284, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  6. McDermott, C. John & Wescott, Robert F., . "Fiscal Reforms That Work," IMF Economic Issues 4, International Monetary Fund. [Downloadable!]
  7. Assar Lindbeck, 1997. "The Swedish Experiment," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1273-1319, September. [Downloadable!] (restricted)
  8. de la Fuente, Angel & Vives, Xavier, 1997. "The Sources of Irish Growth," CEPR Discussion Papers 1756, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  9. Suzanne Kennedy & Janine Robbins, . "The Role of Fiscal Rules in Determining Fiscal Performance," Working Papers-Department of Finance Canada 2001-16, Department of Finance Canada. [Downloadable!]
  10. Perotti, Roberto, 1998. " The Political Economy of Fiscal Consolidations," Scandinavian Journal of Economics, Blackwell Publishing, vol. 100(1), pages 367-94, March. [Downloadable!] (restricted)
  11. Francisco de Castro, 2003. "The macroeconomic effects of fiscal policy in Spain," Banco de España Working Papers 0311, Banco de España. [Downloadable!]
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  12. António Afonso & Werner Ebert & Ludger Schuknecht & Michael Thöne, 2005. "Quality of public finances and growth," Working Paper Series 438, European Central Bank. [Downloadable!]
  13. Graham C. Scott, 1996. "Government Reform in New Zealand," IMF Occasional Papers 140, International Monetary Fund.
  14. Alesina, A. & Perotti, R., 1995. "Fiscal Expansions and Adjustments in OECD Countries," Discussion Papers 1995_25, Columbia University, Department of Economics.
  15. Selma Mahfouz & Richard Hemming & Michael Kell, 2002. "The Effectiveness of Fiscal Policy in Stimulating Economic Activity--A Review of the Literature," IMF Working Papers 02/208, International Monetary Fund. [Downloadable!]
  16. Leonardo Bartolini, 1993. "Devaluation and Competitiveness in a Small Open Economy - Ireland 1987-1993," IMF Working Papers 93/82, International Monetary Fund.
  17. Gerry Boyle; & Jim O'Leary, 1997. "Controlling Public Spending in Times of Plenty," Economics, Finance and Accounting Department Working Paper Series n741197, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth. [Downloadable!]
  18. Isabelle Joumard & Per Mathis Kongsrud & Young-Sook Nam & Robert Price, 2004. "Enhancing the Effectiveness of Public Spending: Experience in OECD Countries," OECD Economics Department Working Papers 380, OECD, Economics Department. [Downloadable!]
  19. John Fitz Gerald, 1999. "Understanding Ireland's Economic Success," Papers WP111, Economic and Social Research Institute (ESRI). [Downloadable!]
  20. Alberto Alesina & Silvia Ardagna, 1998. "Tales of fiscal adjustment," Economic Policy, CEPR, CES, MSH, vol. 13(27), pages 487-545, October. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Richard Morris & Hedwig Ongena & Ludger Schuknecht, 2006. "The reform and implementation of the Stability and Growth Pact," Occasional Paper Series 47, European Central Bank. [Downloadable!]
  2. António Afonso, 2007. "Expansionary fiscal consolidations in Europe: part of conventional wisdom?," Money Macro and Finance (MMF) Research Group Conference 2006 50, Money Macro and Finance Research Group. [Downloadable!]
  3. António Afonso, 2006. "Expansionary fiscal consolidations in Europe: new evidence," Working Papers 2006/18, Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon.. [Downloadable!]
    Other versions:
  4. Niamh Hardiman & Patrick Murphy & Orlaith Burke, 2008. "Legitimating Fiscal Stabilization: Ireland in Comparative Perspective," Working Papers 200813, Geary Institute, University College Dublin. [Downloadable!]
  5. Fabio Moneta & Rasmus Rüffer, 2006. "Business cycle synchronisation in East Asia," Working Paper Series 671, European Central Bank. [Downloadable!]
  6. Paulo Roberto Arvate & Marcos Felipe Mendes Lopes, 2007. "Institutional Changes, Incentive Schemes And The Decision To Undertake Fiscal Adjustments," Anais do XXXV Encontro Nacional de Economia [Proceedings of the 35th Brazilian Economics Meeting] 010, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics]. [Downloadable!]
  7. Andrews, Matthew, 2008. "Are One-Best-Way Models of Effective Government Suitable for Developing Countries?," Working Paper Series rwp08-014, Harvard University, John F. Kennedy School of Government. [Downloadable!]
  8. Daniel Leigh & Alexander Plekhanov & Manmohan S. Kumar, 2007. "Fiscal Adjustments: Determinants and Macroeconomic Consequences," IMF Working Papers 07/178, International Monetary Fund. [Downloadable!]
  9. Joseph P. Byrne & Norbert Fiess & Ronald MacDonald, 2008. "The Global Dimension to Fiscal Sustainability," Working Papers 2008_10, Department of Economics, University of Glasgow. [Downloadable!]
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