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Fiscal Policy, Government Debt and Economic Performance

  • Willi Leibfritz
  • Deborah Roseveare
  • Paul van den Noord

This paper reviews fiscal policy, government indebtedness and its implications for economic performance in OECD countries. Government debt, expenditure and revenue relative to GDP have all risen significantly over the past 15 years and in several countries these trends are unsustainable. The macroeconomic implications of high fiscal deficits and debt levels are considered and the paper finds that while monetary policy played a clear role in generating recovery, the effects of fiscal policy are more mixed. Looking forward, Member countries’ plans for fiscal consolidation are ambitious, but if sustained economic growth is achieved, these plans are achievable. However, if growth is slower, then further fiscal consolidation efforts would be required to keep public debt under control. Finally, the paper considers ways of improving the control over expenditure and the budget process, so as to achieve better fiscal outcomes ... Cet article examine la politique budgétaire, l’endettement public et son incidence sur les résultats économiques dans les pays de l’OCDE. Au cours des quinze dernières années, la dette, les dépenses et les recettes des administrations publiques exprimées en proportion du PIB ont toutes augmenté de façon significative et ces tendances sont devenues insoutenables dans plusieurs pays. Les implications macroéconomiques de ces déficits budgétaires et de cette dette élevés sont étudiées et il en ressort qu’alors que la politique monétaire a joué un rôle évident dans la reprise économique, les effets de la politique budgétaire sont plus mitigés. Pour l’avenir, les programmes d’assainissement budgétaires des pays Membres sont ambitieux. Mais, dans l’hypothèse d’une reprise économique soutenue, ces programmes sont réalisables. Toutefois, si la reprise économique s’avère plus modeste, des efforts supplémentaires d’assainissement budgétaire s’imposeront pour contenir la dette publique. En ...

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Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 144.

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Date of creation: 1994
Date of revision:
Handle: RePEc:oec:ecoaaa:144-en
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