IDEAS home Printed from https://ideas.repec.org/p/imf/imfwpa/2025-201.html
   My bibliography  Save this paper

The Effects of Fiscal Consolidations on the Debt Distribution

Author

Listed:
  • Francesco Frangiamore
  • Davide Furceri
  • Domenico Giannone
  • Mr. Faizaan Kisat
  • Pietro Pizzuto

Abstract

This paper estimates the effects of fiscal expenditure consolidations on the entire distribution of public debt-to-GDP for an unbalanced sample of 192 countries over the period 1991-2021. Employing panel location-scale models, we show that government expenditure cuts significantly lower the location (average) of the future debt-to-GDP distribution and its scale (variance), thus also implying a reduction in the uncertainty surrounding public debt. Consequently, we uncover a downward sloping trend in the effects of government expenditure consolidations across the quantiles of the debt-to-GDP distribution. These effects persist up to a 4-year forecast horizon, with the highest reduction occurring on the right tail of the debt-to-GDP distribution, defined as debt-at-risk. We also show that fiscal expenditure consolidations are more effective in reducing debt-to-GDP when the debt levels are higher and when countries adopt a fiscal rule.

Suggested Citation

  • Francesco Frangiamore & Davide Furceri & Domenico Giannone & Mr. Faizaan Kisat & Pietro Pizzuto, 2025. "The Effects of Fiscal Consolidations on the Debt Distribution," IMF Working Papers 2025/201, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2025/201
    as

    Download full text from publisher

    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=570919
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:2025/201. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Akshay Modi (email available below). General contact details of provider: https://edirc.repec.org/data/imfffus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.