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The Phasing of Fiscal Adjustments: What Works in Emerging Market Economies?


  • Emanuele Baldacci
  • Benedict Clements
  • Sanjeev Gupta
  • Carlos Mulas-Granados


This paper investigates the political and economic determinants of successful fiscal adjustment in 25 emerging market economies from 1980 to 2001. The results show that large and back-loaded fiscal adjustments have the highest likelihood of success. Fiscal consolidations based on expenditure cuts increase the probability of approaching and achieving fiscal sustainability but are insufficient to maintain it unless accompanied by revenue reforms. Adjustment episodes launched in countries where governments enjoy a parliamentary majority and do not face imminent elections, are found to be more successful. Fiscal consolidations undertaken under IMF-supported programs also have a higher probability of success. Copyright © 2006 International Monetary Fund; Journal compilation © 2006 Blackwell Publishing Ltd.

Suggested Citation

  • Emanuele Baldacci & Benedict Clements & Sanjeev Gupta & Carlos Mulas-Granados, 2006. "The Phasing of Fiscal Adjustments: What Works in Emerging Market Economies?," Review of Development Economics, Wiley Blackwell, vol. 10(4), pages 612-631, November.
  • Handle: RePEc:bla:rdevec:v:10:y:2006:i:4:p:612-631

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    References listed on IDEAS

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    8. Bernard Gauthier & Isidro Soloaga & James Tybout, 2002. "A Firm's-Eye View of Commercial Policy and Fiscal Reforms in Cameroon," World Bank Economic Review, World Bank Group, vol. 16(3), pages 449-472, December.
    9. Chambers,Robert G., 1988. "Applied Production Analysis," Cambridge Books, Cambridge University Press, number 9780521314275, March.
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    Cited by:

    1. Christoph A. Schaltegger & Martin Weder, 2015. "Fiscal Adjustments and the Probability of Sovereign Default," Kyklos, Wiley Blackwell, vol. 68(1), pages 81-110, February.
    2. Eichler, Stefan & Hofmann, Michael, 2013. "Sovereign default risk and decentralization: Evidence for emerging markets," European Journal of Political Economy, Elsevier, vol. 32(C), pages 113-134.
    3. Diniz, André, 2016. "Effects of fiscal consolidations in Latin America," Textos para discussão 423, FGV/EESP - Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil).
    4. Schaltegger, Christoph A. & Feld, Lars P., 2009. "Are fiscal adjustments less successful in decentralized governments?," European Journal of Political Economy, Elsevier, vol. 25(1), pages 115-123, March.
    5. repec:bla:sajeco:v:84:y:2016:i:4:p:501-519 is not listed on IDEAS
    6. repec:kap:pubcho:v:171:y:2017:i:3:d:10.1007_s11127-017-0441-0 is not listed on IDEAS
    7. Philippe Burger & Krige Siebrits & Estian Calitz, 2015. "The public sector balance sheet and fiscal consolidation in South Africa," Working Papers 11/2015, Stellenbosch University, Department of Economics.

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