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Are Fiscal Consolidation Episodes Helpful for Public Sector Efficiency?

Antonio Afonso and José Alves

No 9761, CESifo Working Paper Series from CESifo

Abstract: We assess the consequences of fiscal consolidation episodes on public sector efficiency (scores) for 35 OECD countries for the 2007-2020 period. We find that fiscal consolidations improve public sector efficiency and results are robust across efficiency models. Moreover, peripheral euro-area economies and economies with debt-to-GDP ratios between 60% and 90% are those whose public sector efficiency scores improve more when fiscal consolidation episodes occur. The evidence that fiscal consolidations enhance spending efficiency is an additional argument for fiscal consolidations, from a policy perspective.

Keywords: fiscal consolidation episodes; government spending efficiency; panel data; OECD (search for similar items in EconPapers)
JEL-codes: C23 D61 E62 H21 H63 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-eff, nep-mac and nep-pub
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Journal Article: Are fiscal consolidation episodes helpful for public sector efficiency? (2023) Downloads
Working Paper: Are fiscal consolidation episodes helpful for public sector efficiency? (2022) Downloads
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