IDEAS home Printed from
   My bibliography  Save this paper

Choosing Fiscal Consolidation Instruments Compatible with Growth and Equity


  • Boris Cournède


  • Antoine Goujard


  • Álvaro Pina


  • Alain de Serres



Despite sustained efforts made in recent years to rein in budget deficits, a majority of OECD countries still face substantial public finance consolidation needs moving forward, owing to the legacy of debt accumulation before the crisis, and to the role played by fiscal policy in rescuing the banking system and supporting aggregate demand in the aftermath of the recession. Further budget consolidation is also needed over a much longer horizon to face long-term public spending pressures, in particular from pensions and health care. Fiscal consolidation complicates the task of achieving other policy goals. In most cases, it weighs on demand in the short term. And, if too little attention is paid to the mix of instruments used to achieve consolidation, it can slow the process of global rebalancing, undermine long-term growth and exacerbate income inequality. It is therefore important for governments to adopt consolidation strategies that minimise these adverse side-effects. The analysis assesses the near and long-term consolidation needs for OECD countries and proposes consolidation strategies that take into account other policy goals as well as country-specific circumstances and preferences. To do so, increases in particular taxes and cuts in specific spending areas are assessed for their effects on short- and longterm growth, income distribution and external accounts. The results of detailed simulations indicate that a significant number of OECD countries may have to raise harmful taxes or cut valuable spending areas to deliver sufficient consolidation, underscoring the need for structural reforms to counteract these side-effects. Choisir des instruments d'assainissement budgétaire favorables à la croissance et à l'équité Choisir des instruments d’assainissement budgétaire favorables à la croissance et à l’équité Malgré les efforts soutenus entrepris ces dernières années pour endiguer les déficits budgétaires, les besoins d’assainissement des finances publiques demeurent importants dans la plupart des pays de l’OCDE, du fait des dettes accumulées avant la crise et du rôle joué par la politique budgétaire dans le sauvetage du système bancaire et dans le soutien de la demande globale au lendemain de la récession. Des efforts supplémentaires d’assainissement budgétaire sont également nécessaires à long terme pour faire face à l’augmentation des dépenses publiques, en particulier de retraite et de santé. L’assainissement budgétaire complique la réalisation d’autres objectifs des politiques publiques. Dans la plupart des cas, il pèse sur la demande à court terme. De plus, si le choix des instruments à mettre en oeuvre ne fait pas l’objet d’assez d’attention, ceux-ci risquent de ralentir la correction des déséquilibres mondiaux, de réduire la croissance à long terme et d’augmenter les inégalités de revenu. Les stratégies d’assainissement budgétaire adoptées par les gouvernements doivent donc réduire autant que possible ces effets négatifs. L’analyse présente une estimation des besoins d’assainissement à court et à long terme des pays de l’OCDE et propose des stratégies d’ajustement budgétaire qui tiennent compte des autres objectifs des politiques publiques ainsi que de la situation et des préférences propres à chaque pays. Le choix de ces stratégies repose sur une évaluation des effets de différentes augmentations de recettes et diminutions de dépenses sur la croissance à court et à long terme, la répartition des revenus et les comptes courants. Les résultats de simulations détaillées indiquent que de nombreux pays de l’OCDE pourraient avoir à augmenter des taxes préjudiciables ou à réduire des dépenses utiles afin de parvenir au degré d’assainissement budgétaire voulu, soulignant l’intérêt des réformes structurelles pour contrebalancer ces effets négatifs.

Suggested Citation

  • Boris Cournède & Antoine Goujard & Álvaro Pina & Alain de Serres, 2013. "Choosing Fiscal Consolidation Instruments Compatible with Growth and Equity," OECD Economic Policy Papers 7, OECD Publishing.
  • Handle: RePEc:oec:ecoaab:7-en
    DOI: 10.1787/5k43nxq6dzd4-en

    Download full text from publisher

    File URL:
    Download Restriction: no


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Orsetta Causa & Alain de Serres & Nicolas Ruiz, 2015. "Can pro-growth policies lift all boats?: An analysis based on household disposable income," OECD Journal: Economic Studies, OECD Publishing, vol. 2015(1), pages 227-268.
    2. Michele Catalano & Emilia Pezzolla, 2015. "The interaction between the labour tax wedge and structural reforms in Italy," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(5), pages 185-223.
    3. Philipp Heimberger, 2020. "The dynamic effects of fiscal consolidation episodes on income inequality: evidence for 17 OECD countries over 1978–2013," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 47(1), pages 53-81, February.
    4. M. Bussière & L. Ferrara & M. Juillard & D. Siena, 2017. "Can Fiscal Budget-Neutral Reforms Stimulate Growth? Model-Based Results," Working papers 625, Banque de France.
    5. Reimers, Hans-Eggert, 2013. "Remarks on the euro crisis," Wismar Discussion Papers 05/2013, Hochschule Wismar, Wismar Business School.
    6. Orsetta Causa & Alain de Serres & Nicolas Ruiz, 2015. "Structural reforms and income distribution," OECD Economic Policy Papers 13, OECD Publishing.
    7. Philipp Heimberger, 2018. "The Dynamic Effects of Fiscal Consolidation Episodes on Income Inequality," wiiw Working Papers 147, The Vienna Institute for International Economic Studies, wiiw.
    8. Roeger, Werner & Varga, Janos & Veld, Jan in 't & Vogel, Lukas, 2021. "The distributional impact of labour market reforms: A model-based assessment," European Economic Review, Elsevier, vol. 131(C).
    9. Ahmed Waqar Qasim & M. Ali Kemal & Omer Siddique, 2015. "Fiscal Consolidation and Economic Growth: A Case Study of Pakistan," PIDE-Working Papers 2015:124, Pakistan Institute of Development Economics.

    More about this item


    assainissement budgétaire; croissance; déséquilibres mondiaux; equity; fiscal consolidation; global imbalances; growth; income distribution; réforme structurelle; répartition des revenus; structural reforms; équité;
    All these keywords.

    JEL classification:

    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    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:oec:ecoaab:7-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: (). General contact details of provider: .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.