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Expenditure reform in industrialised countries: a case study approach

  • Hauptmeier, Sebastian
  • Heipertz, Martin
  • Schuknecht, Ludger

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 while largely sparing education spending. 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. JEL Classification: H5, H6, O57

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Paper provided by European Central Bank in its series Working Paper Series with number 0634.

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Date of creation: May 2006
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Handle: RePEc:ecb:ecbwps:20060634
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