Modeling Optimal Fiscal Consolidation Paths in a Selection of European Countries
AbstractFor a number of countries - Italy, Netherlands, the United Kingdom, Germany, Ireland, and France - this paper develops an inter-temporal model that elicits the implied country-preferences over balancing the conflicting objectives of fiscal consolidation and reduction of economic slack. The model suggests that some front-loading of adjustment is desirable, although the extent would vary by country preferences. It also finds that proposed consolidations may prove to be stronger than acceptable, especially if somewhat larger than anticipated fiscal multipliers lead to a sizeable economic deceleration.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 11/164.
Date of creation: 01 Jul 2011
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-08-22 (All new papers)
- NEP-CBA-2011-08-22 (Central Banking)
- NEP-EEC-2011-08-22 (European Economics)
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