IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Fiscal Consolidation: How Much, How Fast and by What Means?

  • Douglas Sutherland
  • Peter Hoeller
  • Rossana Merola

The economic and financial crisis was the catalyst for a fiscal crisis that engulfs many OECD countries. Consolidating public finances in order to address the consequences of the crisis, underlying weaknesses and also future spending pressures creates important challenges. Fiscal consolidation requires choices to be made about how much consolidation is needed, how fast it should be implemented and which instruments should be used. Estimates of fiscal gaps suggest that substantial and sustained fiscal tightening will be needed in nearly all countries to bring debt down to prudent levels. However, given a weak global economy, implementing a large fiscal tightening could be particularly costly. Structuring consolidation packages to use instruments with low multipliers initially and enhancing the institutional framework for fiscal policy to lend greater credibility to the commitment to consolidate over time may help minimise the trade-offs with growth in the short run. In most countries there is scope to target spending programmes more effectively and eliminate distortions in taxation. Such measures, buttressed by structural reforms, such as to unsustainable pension systems, can underpin fiscal sustainability, while minimising the costs to long-run growth. Consolidation budgétaire : Quelle ampleur, quel rythme et quels moyens ? La crise économique et financière a servi de catalyseur à une crise budgétaire qui submerge de nombreux pays de l’OCDE. Assainir les finances publiques pour faire face aux conséquences de la crise, aux faiblesses sous-jacentes ainsi qu’aux pressions futures sur les dépenses publiques représente un défi majeur pour bon nombre de pays. La consolidation budgétaire implique des choix quant à l’ampleur de la consolidation nécessaire, au rythme auquel elle doit être mise en œuvre et aux moyens à utiliser. Sur la base d’estimations des écarts budgétaires, il semble qu’il faudra un resserrement budgétaire important et durable dans presque tous les pays pour ramener la dette à des niveaux prudents. Cependant, compte tenu de la faiblesse de l’économie mondiale, la mise en œuvre d’un vaste programme de restriction budgétaire pourrait être particulièrement coûteuse. Structurer les programmes de consolidation de façon à utiliser au départ des instruments à multiplicateurs faibles et, à terme, à améliorer le cadre institutionnel de la politique budgétaire afin de rendre plus crédible l’engagement à assainir les finances publiques pourrait aider à réduire au minimum les arbitrages avec la croissance à court terme. Dans la plupart des pays, il est possible de cibler plus efficacement les programmes de dépenses et d’éliminer les distorsions de la fiscalité. Ces mesures, étayées par des réformes structurelles telles que la réforme des systèmes de retraite, qui ne sont plus tenables, peuvent soutenir la viabilité budgétaire tout en réduisant au minimum les coûts pour la croissance à long terme.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://dx.doi.org/10.1787/5k9bj10bz60t-en
Our checks indicate that this address may not be valid because: 403 Forbidden (http://dx.doi.org/10.1787/5k9bj10bz60t-en [303 See Other]--> http://www.oecd-ilibrary.org/economics/fiscal-consolidation_5k9bj10bz60t-en). If this is indeed the case, please notify ()


Download Restriction: no

Paper provided by OECD Publishing in its series OECD Economic Policy Papers with number 1.

as
in new window

Length:
Date of creation: 12 Apr 2012
Date of revision:
Handle: RePEc:oec:ecoaab:1-en
Contact details of provider: Postal: 2 rue Andre Pascal, 75775 Paris Cedex 16
Phone: 33-(0)-1-45 24 82 00
Fax: 33-(0)-1-45 24 85 00
Web page: http://www.oecd.org
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Carmen M. & M. Belen Sbrancia, 2011. "The Liquidation of Government Debt," Working Paper Series WP11-10, Peterson Institute for International Economics.
  2. Jeffrey A. Frankel, 2011. "Over-optimism in Forecasts by Official Budget Agencies and Its Implications," NBER Working Papers 17239, National Bureau of Economic Research, Inc.
  3. Pablo Antolín & Alain de Serres & Christine de la Maisonneuve, 2004. "Long-Term Budgetary Implications of Tax-Favoured Retirement Plans," OECD Economics Department Working Papers 393, OECD Publishing.
  4. Balázs Égert, 2010. "Fiscal Policy Reaction to the Cycle in the OECD: Pro- or Counter-cyclical?," OECD Economics Department Working Papers 763, OECD Publishing.
  5. Robert E. Hall & Charles I. Jones, 2005. "The value of life and the rise in health spending," Proceedings, Federal Reserve Bank of San Francisco.
  6. Sveinbjörn Blöndal & Simon Field & Nathalie Girouard, 2002. "Investment in Human Capital Through Post-Compulsory Education and Training: Selected Efficiency and Equity Aspects," OECD Economics Department Working Papers 333, OECD Publishing.
  7. Hansjörg Blöchliger & Dae-Ho Song & Douglas Sutherland, 2012. "Fiscal Consolidation: Part 4. Case Studies of Large Fiscal Consolidation Episodes," OECD Economics Department Working Papers 935, OECD Publishing.
  8. Douglas Sutherland & Robert W.R. Price & Isabelle Joumard & Chantal Nicq, 2007. "Performance Indicators for Public Spending Efficiency in Primary and Secondary Education," OECD Economics Department Working Papers 546, OECD Publishing.
  9. Robert P. Hagemann, 2010. "Improving Fiscal Performance Through Fiscal Councils," OECD Economics Department Working Papers 829, OECD Publishing.
  10. Rossana Merola & Douglas Sutherland, 2012. "Fiscal Consolidation: Part 3. Long-Run Projections and Fiscal Gap Calculations," OECD Economics Department Working Papers 934, OECD Publishing.
  11. Douglas Sutherland & Peter Hoeller & Rossana Merola, 2012. "Fiscal Consolidation: Part 1. How Much is Needed and How to Reduce Debt to a Prudent Level?," OECD Economics Department Working Papers 932, OECD Publishing.
  12. Margit Molnar, 2012. "Fiscal Consolidation: Part 5. What Factors Determine the Success of Consolidation Efforts?," OECD Economics Department Working Papers 936, OECD Publishing.
  13. Stephen Cecchetti & Madhusudan Mohanty & Fabrizio Zampolli, 2011. "The real effects of debt," BIS Working Papers 352, Bank for International Settlements.
  14. Reinhart, Carmen M. & Rogoff, Kenneth S., 2010. "Growth in a Time of Debt," Scholarly Articles 11129154, Harvard University Department of Economics.
  15. Joaquim Oliveira Martins & Christine de la Maisonneuve, 2006. "The drivers of public expenditure on health and long-term care: An integrated approach," OECD Economic Studies, OECD Publishing, vol. 2006(2), pages 115-154.
  16. Robert W.R. Price & Thai-Thanh Dang, 2011. "Adjusting Fiscal Balances for Asset Price Cycles," OECD Economics Department Working Papers 868, OECD Publishing.
  17. Vincent Koen & Paul van den Noord, 2005. "Fiscal Gimmickry in Europe: One-Off Measures and Creative Accounting," OECD Economics Department Working Papers 417, OECD Publishing.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:oec:ecoaab:1-en. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()

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.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.

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

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.