A competing risks tale on successful and unsuccessful fiscal consolidations

Luca Agnello, Vitor Castro and Ricardo Sousa

Journal of International Financial Markets, Institutions and Money, 2019, vol. 63, issue C

Abstract: This paper analyses the transitions out of fiscal consolidations using annual data for 17 industrial countries over the period 1975-2013 and applying a discrete-time competing risks duration model. Our approach allows us to distinguish the factors behind a successful or an unsuccessful end of fiscal consolidation episodes. The results show that economic and political factors, the size and typology of fiscal adjustments and the occurrence of crises explain the differences in the length and the success/failure of fiscal consolidations. Moreover, while fiscal adjustment programmes that end successfully display positive duration dependence, those that end in an unsuccessful manner are not duration dependent.

Keywords: Fiscal consolidations; Discrete duration data; Competing risks; Multinomial logit (search for similar items in EconPapers)
JEL-codes: C35 C41 E62 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:63:y:2019:i:c:s1042443118302373

DOI: 10.1016/j.intfin.2019.101148

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