What Sustains Fiscal Consolidations in Emerging Market Countries?

Benedict Clements, Sanjeev Gupta, Erwin Tiongson and Emanuele Baldacci

No 2003/224, IMF Working Papers from International Monetary Fund

Abstract: This paper examines the factors affecting the persistence of fiscal consolidation in 25 emerging market countries during 1980-2001. It proposes a new approach for defining spells of fiscal consolidation. The results indicate that the probability of ending a fiscal adjustment is affected by the legacy of previous fiscal failures, the size of the deficit, the composition of spending, and level of total revenues. There is also some evidence that the initial debt stock, exchange rate developments, inflation, and the unemployment rate have an impact on the persistence of adjustments.

Keywords: WP; deficit; deficit threshold; spending; debt-to-GDP; deficit reduction; fiscal adjustment; fiscal consolidation; survival analysis; emerging markets; deficit level; expenditure reduction; government outlay; debt country; such deficit reduction; exchange rate depreciation; expenditure program; Government debt management; Debt reduction; Middle East; East Africa; Central Africa; Africa; Asia and Pacific (search for similar items in EconPapers)
Pages: 27
Date: 2003-11-01
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Citations: View citations in EconPapers (14)

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