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The Return to Fiscal Rectitude After the Recent Escapade

Author

Listed:
  • Vito Tanzi

    () (International Institute of Public Finance, Munich)

Abstract

Most of the G20 countries have experienced large deteriorations in their fiscal accounts and large increases in their public debts. This deterioration was only partly the consequence of the financial and economic crisis. The countercyclical policies followed by many countries were not effective because of the poor starting fiscal position of most countries, and because the crisis was not a normal Keynesian crisis of declining aggregate demand but it was connected to large structural imbalances. These two conditions much reduced the potency of the stimulative policies. The paper warns that the financial crisis might become a fiscal crisis.

Suggested Citation

  • Vito Tanzi, 2011. "The Return to Fiscal Rectitude After the Recent Escapade," Rivista di Politica Economica, SIPI Spa, issue 3, pages 253-277, JULY-SEPT.
  • Handle: RePEc:rpo:ripoec:y:2011:i:3:p:253-277
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    References listed on IDEAS

    as
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    5. Milton Friedman & Anna J. Schwartz, 1963. "A Monetary History of the United States, 1867–1960," NBER Books, National Bureau of Economic Research, Inc, number frie63-1, April.
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    Cited by:

    1. Luiz de Mello, 2013. "What Can Fiscal Policy Do in the Current Recession? A Review of Recent Literature and Policy Options," Hacienda Pública Española, IEF, vol. 204(1), pages 113-139, March.

    More about this item

    Keywords

    fiscal crisis; fiscal sustainability; public debt; exit strategies; business cycles; economic role of the state;

    JEL classification:

    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H6 - Public Economics - - National Budget, Deficit, and Debt
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy

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