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Past Fiscal Adjustments: Lessons from Failures and Successes

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  • Paolo Mauro
  • Mauricio Villafuerte

Abstract

This paper analyzes large fiscal adjustment plans, defined on the basis of the envisaged reduction in the public debt or deficit, and it compares ex ante plans with ex post outcomes. The motivation for this novel approach is two-fold. First, useful lessons can be drawn not only from successes, but also from failures to meet policy objectives. Second, by taking into account whether observed outcomes stemmed from intended policies or unexpected developments, this paper sheds new light on some of the findings obtained by studies that had relied on a purely ex post approach. The evidence is based on in-depth individual country case studies for each of the G7 countries and on a systematic, cross-country statistical analysis of all fiscal adjustment plans presented by all European Union countries during the past two decades.

Suggested Citation

  • Paolo Mauro & Mauricio Villafuerte, 2013. "Past Fiscal Adjustments: Lessons from Failures and Successes," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 61(2), pages 379-404, June.
  • Handle: RePEc:pal:imfecr:v:61:y:2013:i:2:p:379-404
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    Citations

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    Cited by:

    1. Jesús Ferreiro & Catalina Gálvez & Ana González, 2015. "Fiscal Policies in the European Union during the Crisis," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 62(2), pages 131-155, June.
    2. Antonio Fatás & Atish R. Ghosh & Ugo Panizza & Andrea F Presbitero, 2019. "The Motives to Borrow," IMF Working Papers 19/101, International Monetary Fund.
    3. International Monetary Fund, 2014. "South Africa; Selected Issues," IMF Staff Country Reports 14/339, International Monetary Fund.
    4. Ricci-Risquete, Alejandro & Ramajo, Julián, 2015. "The effects of fiscal policy on the Spanish economy: Keynesian or non-Keynesian behavior?," Journal of Policy Modeling, Elsevier, vol. 37(6), pages 1019-1048.
    5. Dirk Foremny & Agnese Sacchi & Simone Salotti, 2017. "Decentralization and the duration of fiscal consolidation: shifting the burden across layers of government," Public Choice, Springer, vol. 171(3), pages 359-387, June.

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