 To consolidate or not to consolidate? A multi-step analysis to assess needed fiscal sustainabilityAntonio Afonso, José Alves and Joao Jalles No 2022.02, Working Papers from International Network for Economic Research - INFER Abstract: We assess the specific need (or its absence) of a country to implement a fiscal consolidation programme by focusing specifically on their degree of success, notably in terms of fiscal sustainability. The “need†to consolidate is based on having a primary balance above or below the debt-stabilizing primary balance (provided by the IMF’s Debt Sustainability Analysis) for each country. We then link the need for and the actual (historical) existence of fiscal adjustments to their sustainability impact. Looking at a large sample of developed and developing economics over the period 1980-2018, we find that, on average, there is a higher need of consolidations in advanced economies than in developing economies. In addition, the implementation of a fiscal consolidation program implies an improvement in the degree of public finances´ sustainability, for both advanced and developing economies. Finally, fiscal sustainability deteriorates when the need to implement a fiscal retrenchment arises. Keywords: fiscal consolidations; cyclically-adjusted primary balance; sustainability; panel data; time-varying (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:inf:wpaper:2022.02 Access Statistics for this paper More papers in Working Papers from International Network for Economic Research - INFER Contact information at EDIRC. |
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