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What Sustains Fiscal Consolidations in Emerging Market Countries?

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  • Mr. Benedict J. Clements
  • Mr. Sanjeev Gupta
  • Mr. Erwin H Tiongson
  • Mr. Emanuele Baldacci

Abstract

This paper examines the factors affecting the persistence of fiscal consolidation in 25 emerging market countries during 1980-2001. It proposes a new approach for defining spells of fiscal consolidation. The results indicate that the probability of ending a fiscal adjustment is affected by the legacy of previous fiscal failures, the size of the deficit, the composition of spending, and level of total revenues. There is also some evidence that the initial debt stock, exchange rate developments, inflation, and the unemployment rate have an impact on the persistence of adjustments.

Suggested Citation

  • Mr. Benedict J. Clements & Mr. Sanjeev Gupta & Mr. Erwin H Tiongson & Mr. Emanuele Baldacci, 2003. "What Sustains Fiscal Consolidations in Emerging Market Countries?," IMF Working Papers 2003/224, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2003/224
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    References listed on IDEAS

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    Cited by:

    1. Michaela Dodini & Marco Fantini, 2006. "The EU Neighbourhood Policy: Implications for Economic Growth and Stability," Journal of Common Market Studies, Wiley Blackwell, vol. 44, pages 507-532, September.
    2. Ali BAYAR & Bram SMEETS, 2009. "Excessive Deficits in the European Union: An Analysis of Entry and Exit Dynamics," EcoMod2009 21500011, EcoMod.
    3. Mr. Benedict J. Clements & Mr. Sanjeev Gupta & Mr. Emanuele Baldacci & Mr. Carlos Mulas-Granados, 2004. "Front-Loaded or Back-Loaded Fiscal Adjustments: What Works in Emerging Market Economies?," IMF Working Papers 2004/157, International Monetary Fund.
    4. Ali Bayar & Bram Smeets, 2009. "Government Deficits in the European Union: An Analysis of Entry and Exit Dynamics," CESifo Working Paper Series 2703, CESifo.
    5. Salem KANOUN, 2014. "The Sustainability of Fiscal Adjustment Process : A Quantitative Approach With an Application to Tunisia," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(10), pages 1314-1331, October.
    6. Philippe Burger & Estian Calitz, 2021. "Covid‐19, Economic Growth and South African Fiscal Policy," South African Journal of Economics, Economic Society of South Africa, vol. 89(1), pages 3-24, March.
    7. Ms. Corinne C Delechat & Ms. Ejona Fuli & Mrs. Dafina Glaser & Mr. Gustavo Ramirez & Rui Xu, 2015. "Exiting From Fragility in sub-Saharan Africa: The Role of Fiscal Policies and Fiscal Institutions," IMF Working Papers 2015/268, International Monetary Fund.
    8. Robert Lavigne, 2006. "The Institutional and Political Determinants of Fiscal Adjustment," Staff Working Papers 06-1, Bank of Canada.
    9. Mr. Murtaza H Syed & Mr. Michael Skaarup & Mr. Tarhan Feyzioglu, 2008. "Addressing Korea’s Long-Term Fiscal Challenges," IMF Working Papers 2008/027, International Monetary Fund.
    10. Corinne Deléchat & Ejona Fuli & Dafina Mulaj & Gustavo Ramirez & Rui Xu, 2018. "Exiting from Fragility in Sub‐Saharan Africa: The Role of Fiscal Policies and Fiscal Institutions," South African Journal of Economics, Economic Society of South Africa, vol. 86(3), pages 271-307, September.
    11. Mohamed Fenira, 2014. "Democracy: A Determinant Factor in Reducing Inflation," International Journal of Economics and Financial Issues, Econjournals, vol. 4(2), pages 363-375.
    12. 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.
    13. World Bank, 2008. "Nicaragua : Public Expenditure Review 2001-2006," World Bank Publications - Reports 8090, The World Bank Group.
    14. 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.

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