Front-Loaded or Back-Loaded Fiscal Adjustments; What Works in Emerging Market Economies?

This paper investigates the political and economic determinants of successful fiscal adjustment in 25 emerging market economies from 1980 to 2001. The results show that large and back-loaded fiscal adjustments have the highest likelihood of success. Fiscal consolidations based on expenditure cuts increase the probability of approaching and achieving fiscal sustainability but are insufficient to maintain it unless accompanied by revenue reforms. Adjustment episodes launched in countries where governments enjoy a parliamentary majority and do not face imminent elections, are found to be more successful. Fiscal consolidations undertaken under IMF-supported programs also have a higher probability of success.

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Year of publication:	2004-08-01
Authors:	Clements, Benedict J. ; Gupta, Sanjeev ; Baldacci, Emanuele ; Mulas-Granados, Carlos
Institutions:	International Monetary Fund (IMF)
Subject:	Emerging markets \| Transition economies \| Economic models \| Structural adjustment \| fiscal adjustments \| fiscal adjustment \| fiscal sustainability \| probability \| statistics \| budget balance \| fiscal policy \| primary budget balance \| equation \| fiscal consolidations \| public debt \| fiscal position \| fiscal consolidation \| dummy variable \| fiscal affairs department \| fiscal balance \| fiscal affairs \| expenditure cuts \| descriptive statistics \| primary fiscal balance \| sample mean \| public finances \| fiscal adjustment episodes \| budget deficits \| statistical significance \| fiscal conditions \| equations \| fiscal target \| fiscal imbalances \| fiscal contractions \| spending cuts \| simultaneous equations \| public spending \| fiscal policies \| fiscal balances \| discrete change \| fiscal expansion \| tax administration \| independent variables \| budgetary position \| fiscal consolidation episodes \| discretionary fiscal policy \| tax base \| fiscal behavior \| public finance \| composition of public spending \| budgetary process \| outliers \| budget process \| estimation procedure \| fiscal stance \| fiscal retrenchment \| autocorrelation \| fiscal vulnerability \| fiscal imbalance \| fragmented fiscal policy \| fiscal discipline \| budgetary consolidation \| fiscal adjustment efforts \| expenditure policy \| tax reforms \| fiscal decentralization \| fiscal control \| fiscal deficit \| fiscal adjustment in transition

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Extent:	application/pdf
Series:	IMF Working Papers.
Type of publication:	Book / Working Paper
Language:	English
Notes:	The text is part of a series IMF Working Papers Number 04/157 2 pages long
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005825965