OECD Journal: Economic Studies

Fait suite à
OECD Economic Studies
Frequency :
Annuel
ISSN :
1995-2856 (en ligne)
ISSN :
1995-2848 (imprimé)
DOI :
10.1787/19952856
Cacher / Voir l'abstract

OECD Journal: Economic Studies publishes articles in the area of economic policy analysis, applied economics and statistical analysis, generally with an international or cross-country dimension. While it draws significantly on economic papers produced by the Economics Department and other parts of the OECD Secretariat for the Organisation’s intergovernmental committees, the submission of articles produced by non-OECD authors is encouraged. We also welcome comments on articles previously published in the journal. Now published as part of the OECD Journal package.

Article
 

Fiscal consolidation

What factors determine the success of consolidation efforts? You do not have access to this content

Anglais
 
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Auteur(s):
Margit Molnár
Date de publication
04 jan 2013
Pages
5
Bibliographic information
N°:
5,
Volume:
2012,
Numéro:
1
Pages
123–149
DOI
10.1787/eco_studies-2012-5k8zs3twgmjc

Cacher / Voir l'abstract

The global economic and financial crisis exacerbated the need for fiscal consolidation in many OECD countries. Drawing lessons from past episodes of fiscal consolidation, this study investigates the economic environments, political settings and policy measures conducive to fiscal consolidation and debt stabilisation using probit, duration, truncated regression and bivariate Heckman selection methods. The empirical analysis builds on the earlier literature and extends it to include new aspects that may be of importance for consolidating governments. The empirical analysis confirms previous findings that the presence of fiscal rules – expenditure or budget balance rules – is associated with a greater probability of stabilising debt. Crucial in determining the causal link behind the association, the results also reveal an independent role for such rules over and above the impact of preferences for fiscal prudence. Also, while the analysis confirms that spending-driven adjustments visà- vis revenue-driven ones are more likely to stabilise debt, it also reveals that large consolidations need multiple instruments for consolidation to succeed. Sub-national governments, in particular state-level governments can contribute to the success of central government consolidation, if they co-operate. To ensure that state-level governments do co-operate, having the right regulatory framework with the extension of fiscal rules to sub-central government levels is important.