Fiscal issues in adjustment : an introduction

Adjustment to the macroeconomic crises of the eighties was least successful on the fiscal front. The authors, in this introduction to a symposium on fiscal issues in adjustment, summarize the issues raised by papers in the symposium. Those papers deal with various aspects of the fiscal crisis that many developing countries faced in the eighties. After a brief introduction on the magnitude of the crisis, the authors summarize issues discussed in three areas. On the macroeconomics of adjustment, they discuss the size of fiscal adjustment, the impact of deficit reductions, and the methods of reducing the deficit. On fiscal system reform, they survey reforms occasioned by the fiscal crisis: choice of spending cuts and reform of the tax system. They close with a discussion of new directions for research: the growth effects of fiscal policy and the political economy of fiscal policy.