Is fiscal fatigue a threat to consolidation programmes?

Luca Agnello (), Vitor Castro and Ricardo Sousa

Environment and Planning C, 2015, vol. 33, issue 4, 765-779

Abstract: Abstract Building on a narrative approach to identify episodes of fiscal consolidation, data for a group of seventeen industrial countries over the period 1978–2009, and continuous-time duration models, we find evidence suggesting that the likelihood of a fiscal consolidation ending increases over time, but only for programmes that last fewer than six years. Additionally, fiscal consolidations tend to last longer in non-European than in European countries. Our results emphasize that chronic fiscal imbalances might lead to a vicious austerity cycle, while discipline in the behaviour of fiscal authorities is a means of achieving credible and shorter adjustment measures. Therefore, fiscal fatigue is likely to compromise the implementation and successfulness of fiscal consolidation programmes.

Keywords: fiscal consolidation; duration analysis; Weibull model; duration dependence; change points (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:envirc:v:33:y:2015:i:4:p:765-779

DOI: 10.1177/0263774X15597391

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