## _wp11128

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---

### I. INTRODUCTION — database and sample
- New database constructed of fiscal consolidation measures taken by governments of 17 OECD economies to reduce budget deficits during 1978-2009.
- Rationale for historical-approach identification:
  - Conventional identification using the change in the cyclically-adjusted primary budget balance (CAPB) is problematic because of measurement errors and reverse causality.
  - Cyclical adjustment can fail to remove effects of sharp swings in economic activity and asset prices, producing CAPB changes correlated with but not caused by policy actions.
  - Discretionary CAPB changes can be motivated by responses to cyclical fluctuations, biasing estimates toward finding expansionary effects.
- Historical-approach advantages:
  - Examines contemporaneous policy documents (Budget Reports, Budget Speeches, central bank reports, Convergence and Stability Programs, IMF reports, OECD Economic Surveys, and country-specific sources) to identify measures motivated primarily by deficit reduction.
  - Deficit-reduction actions are responses to past decisions/conditions and are less likely to be correlated with short-term output developments.
- Sample summary:
  - 173 fiscal policy adjustments in 17 OECD economies between 1978 and 2009.
  - Countries: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, Portugal, Spain, Sweden, the United Kingdom and the United States.
  - Data presented at annual frequency.

### II. METHODOLOGY — motivation, budgetary effects, and implementation
- Motivation of measures — inclusion rule:
  - Two principal motivations in historical documents: (i) reduce the budget deficit (sustainability) and (ii) restrain domestic demand (cyclical reasons).
  - Record measures only when motivated primarily by desire to reduce the budget deficit; measures primarily motivated by restraining domestic demand are noted but excluded from the database.
  - If consolidation measures are followed by offsetting countercyclical discretionary stimulus due to adverse shocks, the original consolidation measures are nonetheless included to avoid selection bias.
  - If consolidation is offset by fiscal actions not primarily motivated by cyclical fluctuations, sum the measures and include consolidation only if the overall change yields budgetary savings.
  - Sources examined for motivation include Budget Reports, Budget Speeches, IMF Recent Economic Developments, IMF Staff Reports, OECD Economic Surveys, country-specific official publications, and in one case a transcript of a television interview.
- Budgetary effects — measurement and accounting conventions:
  - Use contemporaneous budgetary estimates in historical sources; record budgetary effect in the year the measure comes into effect.
  - Government concept corresponds to general government unless otherwise stated.
  - Scale budgetary impacts in percent of GDP for empirical work.
  - Implementation filter: announced but not implemented measures (per subsequent historical documents) are excluded.
  - Distinguish temporary vs. permanent measures:
    - Temporary measure: positive budgetary impact when in effect, negative when it expires (example coding: one-year tax increase of $1 billion recorded as $1 billion in year t and –$1 billion in year t+1).
    - Permanent measure: positive impact in year of implementation and zero thereafter.
  - Budgetary effects can be both negative and positive.

### III. COUNTRY-BY-COUNTRY SUMMARY — key episodes, magnitudes, and motivations
- Australia (selected episodes and calendar-year allocations)
  - Multiyear program began 1985: measures totaling 0.45 percent of GDP in 1985.
  - 1986: fiscal consolidation continued with measures totaling 1.02 percent of GDP; calendar-year totals (percent of GDP) across 1986-1988:
    - Total: 0.57 percent in 1986; 0.45 percent in 1987; –0.35 percent in 1988.
    - Spend: 0.40 percent in 1986; 0.26 percent in 1987; –0.08 percent in 1988.
    - Tax: 0.17 percent in 1986; 0.19 percent in 1987; –0.27 percent in 1988.
  - 1987: fiscal consolidation totaled 0.90 percent of GDP (spending cuts 0.71 percent; tax increases 0.19 percent).
  - 1988: fiscal consolidation totaled 0.10 percent of GDP (spending cuts 0.37 percent; tax cuts 0.27 percent).
  - 1994: fiscal consolidation totaled 0.25 percent of GDP based entirely on tax measures (calendar-year allocation: 0.25 percent in both 1994 and 1995).
  - 1996: fiscal consolidation totaled 0.62 percent of GDP (spending cuts 0.28 percent; tax hikes 0.34 percent).
  - 1997: fiscal consolidation totaled 0.70 percent of GDP (spending cuts 0.525 percent; tax measures 0.175 percent).
  - 1998: fiscal consolidation totaled 0.37 percent of GDP (spending cuts 0.32 percent; tax measures 0.05 percent).
  - 1999: implied consolidation 0.035 percent of GDP (spending cuts 0.07; tax impact –0.035).
- Austria (selected episodes)
  - 1980: total 0.80 percent of GDP (spending cuts 0.69; tax hikes 0.11).
  - 1981: total 1.56 percent of GDP (spending cuts 1.06; tax hikes 0.50).
  - 1984: total 2.04 percent of GDP (tax hikes 1.30; spending cuts 0.74).
  - 1996: total 2.41 percent of GDP (spending cuts 1.53; tax hikes 0.88).
  - 1997: total 1.56 percent of GDP (spending cuts 1.12; tax hikes 0.44).
  - 2001: total 1.02 percent of GDP (tax hikes 0.90; spending cuts 0.12).
  - 2002: total 0.55 percent of GDP based on spending cuts.
- Belgium (selected years 1982–1997)
  - 1982: total 1.66 percent of GDP (spending cuts 1.66).
  - 1983: total 1.79 percent of GDP (spending cuts 1.10; tax hikes 0.69).
  - 1984: total 0.69 percent of GDP (spending cuts 0.41; tax hikes 0.28).
  - 1985: total 1.61 percent of GDP (spending cuts 0.88; tax measures 0.73).
  - 1987: total 2.80 percent of GDP (spending cuts 2.80).
  - 1990: total 0.60 percent of GDP (spending cuts 0.20; tax hikes 0.40).
  - 1992: total 1.79 percent of GDP (spending cuts 0.80; tax hikes 0.99); about half of tax hikes and half of spending cuts were temporary.
  - 1993: total 0.92 percent of GDP (spending cuts 0.49; tax hikes 0.43).
  - 1994: total 1.15 percent of GDP (spending cuts 0.60; tax hikes 0.55).
  - 1996: total 1.00 percent of GDP (spending cuts 0.50; tax hikes 0.50); reported budgetary impact 1.30 in 1996 and –0.50 in 1997 due to one-off measures.
  - 1997: total 0.91 percent of GDP (spending cuts 0.50; tax hikes 0.41).
- Canada (selected years 1984–1997; calendar-year allocations follow authors’ convention)
  - Fiscal year April-March; allocation convention example provided.
  - 1984: total 0.27 percent of GDP (tax hikes).
  - 1985: total 1.03 percent of GDP (tax hikes 0.53; spending cuts 0.50).
  - 1986: total 0.99 percent of GDP (tax hikes 0.84; spending cuts 0.15).
  - 1987: total 0.28 percent of GDP (tax hikes 0.14; spending cuts 0.14).
  - 1988: total 0.30 percent of GDP (tax hikes 0.33; spending increase 0.03).
  - 1989: total 0.31 percent of GDP (tax hikes 0.24; spending cuts 0.08).
  - 1990: total 0.86 percent of GDP (tax hikes 0.57; spending cuts 0.29).
  - 1991: total 0.40 percent of GDP (spending cuts 0.27; tax hikes 0.13).
  - 1992: total 0.21 percent of GDP (spending cuts 0.22; tax reduction 0.01).
  - 1993: total 0.35 percent of GDP (spending cuts 0.36; tax reduction 0.01).
  - 1994: total 0.49 percent of GDP (spending cuts 0.45; tax hikes 0.04).
  - 1995: total 0.99 percent of GDP (spending cuts 0.81; tax hikes 0.18).
  - 1996: total 0.97 percent of GDP (spending cuts 0.88; tax hikes 0.09).
  - 1997: total 0.47 percent of GDP (spending cuts 0.47; tax measures 0.01) — net of long-run initiatives, calendar-year total C$ 4.2 billion (0.47 percent of GDP): spending cuts C$ 4.1 billion; tax hikes C$ 46 million.
  - Table 1 calendar-year Change in Saving (Deficit-driven Measures) totals (selected entries, units preserved):
    - 1984: 1,215
    - 1985: 5,233
    - 1986: 5,533
    - 1987: 3,506
    - 1988: 1,250
    - 1989: 3,989
    - 1990: 5,511
    - 1991: 3,295
    - 1992: 1,326
    - 1993: 2,550
    - 1994: 3,704
    - 1995: 7,979
    - 1996: 8,267
    - 1997: 4,745
  - Memorandum — Nominal GDP (selected years):
    - 1984: 449,582
    - 1985: 485,714
    - 1986: 512,541
    - 1987: 558,949
    - 1988: 613,094
    - 1989: 657,728
    - 1990: 679,921
    - 1991: 685,367
    - 1992: 700,480
    - 1993: 727,184
    - 1994: 770,873
    - 1995: 810,426
    - 1996: 836,864
    - 1997: 882,733
- Denmark (selected episodes)
  - 1983: total 2.77 percent of GDP (spending cuts 1.85; tax hikes 0.92).
  - 1984: total 2.38 percent of GDP (spending cuts 1.71; tax hikes 0.67).
  - 1985: total 1.54 percent of GDP (spending cuts 0.77; tax hikes 0.77); one-off tax measure implied –0.72 percent of GDP in 1986.
  - 1995: total 0.30 percent of GDP (indirect taxes and social security contributions).
- Finland (selected episodes)
  - 1992: total 0.91 percent of GDP (spending cuts).
  - 1993: total 3.71 percent of GDP (spending cuts).
  - 1994: total 3.46 percent of GDP (spending cuts 2.77; one-off tax-refund postponement 0.69).
  - 1995: total 1.65 percent of GDP (spending cuts 2.28; temporary tax measure expiration –0.63).
  - 1996: total 1.47 percent of GDP (spending cuts; motivation: debt reduction and Maastricht criteria).
  - 1997: total 0.23 percent of GDP (spending cuts 0.93; tax cuts –0.70 due to long-run supply-side motivation subtracted).
  - Late 1997–1999: 1998 measures (spending freeze and additional cuts around 0.5 percent of GDP) characterized as restraining domestic demand and not recorded as deficit-reduction consolidation.
- France (selected episodes)
  - 1979: total 0.85 percent of GDP (tax increases).
  - 1987: total 0.26 percent of GDP (spending cuts 0.76; net tax reduction –0.50).
  - 1989: temporary tax hike introduced in 1987 expired with –0.20 percent of GDP in 1989.
  - 1991: total 0.25 percent of GDP (spending cuts); part temporary recorded as –0.10 percent in 1992.
  - 1995: total 0.28 percent of GDP (tax hikes 0.43; spending increases 0.15 offsetting).
  - 1996: total 1.33 percent of GDP (tax hikes 0.86; spending cuts 0.47), including social security reform contributing 0.50 percent of GDP in 1996.
  - 1997: total 0.50 percent of GDP (tax hikes 0.41; spending cuts 0.09); subsequent expirations with –0.10 in 1999 and –0.20 in 2000 related to temporary measures.
- Germany (1982–2007 selected episodes)
  - 1982: total 1.18 percent of GDP (tax hikes 0.56 with 0.41 temporary; spending cuts 0.62).
  - 1983: total 0.87 percent of GDP (spend 0.57; tax 0.30).
  - 1984: total 0.18 percent of GDP (spend 0.59; temporary tax expiration –0.41).
  - 1991: total 1.11 percent of GDP (tax hikes 1.08; spending cuts 0.03); some temporary tax hikes expire with –0.46 percent in 1993.
  - 1992: total 0.46 percent of GDP (tax 0.27; spend 0.19).
  - 1993: total 0.11 percent of GDP (spend 0.18; tax –0.07).
  - 1994: total 0.91 percent of GDP (spend 0.83; tax 0.08).
  - 1995: total 1.08 percent of GDP (spend 0.84; tax 0.24).
  - 1997: total 1.60 percent of GDP (spend 1.10; tax 0.50).
  - 1998: temporary spending freeze expired –0.10 percent in 1998; no net tax consolidation in 1998.
  - 1999: total 0.30 percent of GDP (tax hikes).
  - 2000: total 0.70 percent of GDP (spend 0.75; tax cuts –0.05).
  - 2003: total 0.74 percent of GDP (tax hikes, € 16 billion, 0.74 percent).
  - 2004: total 0.40 percent of GDP (spend 1.10; tax cuts 0.70; net consolidation because spending cuts larger).
  - 2006: total 0.50 percent of GDP (spend cuts).
  - 2007: total 0.90 percent of GDP (spend 0.40; tax hikes 0.50) including VAT hike from 16 to 19 partly offset by cut in social security contributions.
  - Notes: 2001-2002 tax cuts motivated by long-run supply-side considerations not recorded as consolidation; 2005 and 2008 featured no net consolidation due to offsetting tax cuts and reforms.
- Ireland (selected episodes)
  - 1982: total 2.80 percent of GDP (tax hikes 2.54; spending cuts 0.26).
  - 1983: total 2.50 percent of GDP (tax hikes 2.44; spending cuts 0.06).
  - 1984: total 0.29 percent of GDP (tax hikes).
  - 1985: total 0.12 percent of GDP (tax hikes).
  - 1986: total 0.74 percent of GDP (tax hikes).
  - 1987: total 1.65 percent of GDP (spending cuts 1.12; tax hikes 0.53).
  - 1988: total 1.95 percent of GDP (spending cuts).
  - 2009: total 4.74 percent of GDP (spend 2.39; tax hikes 2.35) where spending-side contributions reported as 0.35+1.13+0.92 = 2.39 percent of GDP and revenue-side 1.22+1.13 = 2.35 percent of GDP.
- Italy (selected episodes)
  - 1991: total 2.77 percent of GDP (tax hikes 1.69; spending cuts 1.08).
  - 1992: total 3.50 percent of GDP (spend 1.90; tax 1.60).
  - 1993: total 4.49 percent of GDP (spend 2.49; tax 2.00) after one-off expirations.
  - 1994: total 1.43 percent of GDP (spend 1.70; tax reductions –0.27).
  - 1995: total 4.20 percent of GDP (spend 1.79; tax 2.41) including one-off revenues with –2.16 percent impact in 1996.
  - 1996: total 0.34 percent of GDP (spend 1.08; tax –0.74 after expiration).
  - 1997: total 1.82 percent of GDP (spend 0.93; tax 0.89).
  - 1998: total 0.68 percent of GDP (spend 0.67; tax 0.01 after expiration).
  - 2004: total 1.30 percent of GDP (spend 0.63; tax 0.67).
  - 2005: total 1.00 percent of GDP (spend 0.60; tax 0.40).
  - 2006: total 1.39 percent of GDP (spend 0.89; tax 0.50).
  - 2007: total 1.03 percent of GDP (tax 1.32; spending increases 0.29 offsetting).
- Japan (selected episodes)
  - 1979: fiscal consolidation in 1979 amounted to 0.115 percent of GDP (tax hikes) with calendar-year allocations producing 0.115 in 1979, 0.123 in 1980, and 0.031 in 1981.
  - 1980: total 0.213 percent of GDP (tax hikes).
  - 1981: total 0.434 percent of GDP (tax hikes).
  - 1982: total 0.71 percent of GDP (spend 0.40; tax 0.31).
  - 1983: total 0.422 percent of GDP (spend 0.365; tax 0.057).
  - 1997: total 1.425 percent of GDP (spend 0.45; tax 0.975) including consumption tax rate increase from 3 to 5 percent; calendar-year 1998 carryover 0.475 percent (tax 0.325; spend 0.15).
  - 1999–2002: consolidation suspended late 1998 and resumed in 2003.
  - 2003: total 0.48 percent of GDP (spending cuts, public investment decline).
  - 2004: total 0.6375 percent of GDP (spend 0.45; tax 0.1875).
  - 2005: total 0.2825 percent of GDP (spend 0.22; tax 0.0625).
  - 2006: total 0.72 percent of GDP (spend 0.27; tax 0.45); calendar-year allocation of a 0.6 percent of GDP tax increase yields 0.45 in 2006 and 0.15 in 2007.
  - 2007: total 0.15 percent of GDP (tax hikes).
  - Note: 2008–09 medium-term measures not fully implemented after global financial crisis.
- Netherlands (selected episodes)
  - 1981: total 1.75 percent of GDP (spend 1.22; tax 0.53).
  - 1982: total 1.71 percent of GDP (spend 1.15+0.56).
  - 1983: total 3.24 percent of GDP (spend 2.75; tax 0.49).
  - 1984: total 1.76 percent of GDP (spend 1.76).
  - 1985: total 1.24 percent of GDP (spend 1.24 net after delays).
  - 1986: total 1.74 percent of GDP (spend 1.74).
  - 1987: total 1.48 percent of GDP (tax measures 1.48).
  - 1988: total 0.06 percent of GDP (spend 0.75; tax –0.69).
  - 1991: total 0.87 percent of GDP (tax measures one-time; implies –0.87 in 1992).
  - 1992–1993: various net consolidations with one-offs and expirations producing net impacts described in percent of GDP terms.
  - 2004: total 1.70 percent of GDP (spend 1.30; tax 0.40).
  - 2005: total 0.50 percent of GDP (spend 0.30; tax 0.20).
- Portugal (selected episodes)
  - 1983: total 2.30 percent of GDP (spend 0.95; tax 1.35).
  - 2000: total 0.50 percent of GDP (spend freeze).
  - 2002: total 1.60 percent of GDP (spend 0.40; tax 1.20) after excluding 0.50 percent of GDP financial transactions.
  - 2003: 2002 tax amnesty yielded 0.15 percent of GDP in 2003; change in saving due to the 2002 tax measure in 2003 was –0.75 percent of GDP (0.15–0.90). One-off financial transactions amounted to 2.3 percent of GDP and are not entered as tax hikes or spending cuts in the database.
  - 2005: total 0.60 percent of GDP (tax 0.52; spend 0.08).
  - 2006: total 1.65 percent of GDP (tax 1.10; spend 0.55).
  - 2007: total 1.40 percent of GDP (tax 0.50; spend 0.90).
- Spain (selected episodes)
  - 1983: total 1.90 percent of GDP (tax hikes).
  - 1984: total 1.12 percent of GDP (spend 0.75; tax 0.37).
  - 1989: total 1.22 percent of GDP (tax 0.98; spend 0.24); some measures temporary produced –0.40 percent of GDP in 1990.
  - 1992: total 0.70 percent of GDP (spend 0.40; tax 0.30).
  - 1993: total 1.10 percent of GDP (tax 0.80; spend 0.30).
  - 1994: total 1.60 percent of GDP (spend 1.60, public investment 1.40).
  - 1995: total 0.74 percent of GDP (spend).
  - 1996: total 1.30 percent of GDP (spend 1.10; tax 0.20).
  - 1997: total 1.20 percent of GDP (spend 1.10; tax 0.10).
- Sweden (early-to-late 1990s multiyear program)
  - 1993: fiscal consolidation totaled 1.81 percent of GDP (spend 1.39; tax 0.42) with SKr 21.9 billion (8.1+6.0+7.8) total and SKr 6.6 billion in tax hikes.
  - Multiyear program commitment announced September 1994: measures to 8 percent of GDP over 1995–1998; composition: 60 percent spending, 40 percent taxes.
  - Yearly reported magnitudes (1995–1998):
    - 1995: 3.50 percent of GDP (spend 2.10; tax 1.40).
    - 1996: 2.00 percent of GDP (spend 1.20; tax 0.80).
    - 1997: 1.50 percent of GDP (spend 0.90; tax 0.60).
    - 1998: 1.00 percent of GDP (spend 0.60; tax 0.40).
  - Program outcomes: general government financial surplus estimated for 1998: 1.6 percent of GDP; medium-term goal announced: surplus 2 percent of GDP per year over the cycle.
- United Kingdom (selected consolidations 1979–1996; 1997–1999 overview)
  - 1979 (calendar-year allocation): consolidation 0.27 percent of GDP (spend 0.72; tax cuts 0.45).
  - 1981 (calendar-year allocation from FY 1981/82 measures): consolidation 1.58 percent of GDP in 1981 and 0.53 percent in 1982; total FY 1981/82 consolidation about 2.11 percent of GDP.
  - 1994 (November 1994 Budget): total 0.83 percent of GDP (spend 0.15; tax 0.68) with calendar-year allocation 1994 = 0.825 and 1995 = 0.275.
  - 1996: total 0.30 percent of GDP (spend).
  - 1997–1999 (July 1997 Budget and related measures):
    - 1997: total 0.69 percent of GDP (tax 0.53; spend 0.16).
    - 1998: total 0.31 percent of GDP (tax 0.30; spend 0.01).
    - 1999: total 0.21 percent of GDP (tax 0.206; spend 0.005).
- United States (selected consolidations 1978–1998 and note for 2000–2009)
  - 1978: 0.135 percent of GDP (tax hike $2.9 billion).
  - 1980: 0.062 percent of GDP (tax hike $1.7 billion).
  - 1981: net consolidation 0.23 percent of GDP ($8.3 billion net after offsetting ERTA-81 tax cut).
  - 1985: 0.21 percent of GDP (tax hikes $8.8 billion).
  - 1986: 0.096 percent of GDP (tax hikes $4.2 billion).
  - 1988: 0.85 percent of GDP (tax 0.39; spend 0.46).
  - 1990: 0.33 percent of GDP (tax 0.26; spend 0.07).
  - 1991: 0.58 percent of GDP (tax 0.29; spend 0.29) driven by OBRA-90.
  - 1992: 0.52 percent of GDP (tax 0.24; spend 0.29).
  - 1993: 0.32 percent of GDP (tax 0.08; spend 0.23) including OBRA-93 effects.
  - 1994: 0.90 percent of GDP (spend 0.50; tax 0.40).
  - 1995: 0.53 percent of GDP (spend 0.33; tax 0.20).
  - 1996: 0.29 percent of GDP (spend 0.22; tax 0.08).
  - 1997: 0.30 percent of GDP (spend 0.24; tax 0.06).
  - 1998: 0.15 percent of GDP (spend 0.15).
  - 2000–2009: no fiscal consolidation occurred; legislation (Balanced Budget Act of 1997, Tax Payer Relief Act of 1997, Economic Growth and Tax Relief Reconciliation Act of 2001) produced no net deficit-driven consolidation when netted.

### IV. Cross-cutting findings, fiscal arithmetic, and accounting conventions
- Consolidation instruments and composition:
  - Consolidation episodes are achieved via spending cuts, tax hikes, or combinations; many episodes provide currency and percent-of-GDP magnitudes.
  - Supply-side motivated tax reforms sometimes entail near-term negative budgetary impacts that are subtracted when assessing net fiscal consolidation.
  - One-off measures and asset sales produce temporary positive impacts often followed by offsetting impacts in subsequent years; financial transactions and asset sales are recorded in the narrative but excluded from counts of tax hikes or spending cuts in the database.
- Accounting and allocation conventions emphasized:
  - Calendar-year allocation convention used by authors; examples given (Australia A$ allocation, Canada April-March fiscal-year split, Japan FY-to-calendar allocations).
  - Temporary measures coded with positive impact in implementation year and negative impact when they expire.
  - Implementation filter excludes announced-but-not-implemented measures.
- Policy motivations recurrent across countries:
  - Deficit and debt reduction, meeting Maastricht and Stability and Growth Pact criteria, restoring financial sustainability, and restoring investor confidence are explicit motivations cited frequently.
  - Some fiscal tightening aimed at restraining domestic demand (countercyclical motives) is identified but excluded from the deficit-reduction consolidation database.

*Source: Excerpt from IMF working paper _wp11128 (content provided from the PDF).*

### References .............................................................................................................

### _wp11128 - References

### I. INTRODUCTION
- New database constructed of fiscal consolidation measures taken by governments of 17 OECD economies to reduce budget deficits during 1978-2009.
- Rationale for historical-approach identification:
  - Conventional identification using the change in the cyclically-adjusted primary budget balance (CAPB) is problematic due to measurement errors and reverse causality.
  - Cyclical adjustment can fail to remove effects of sharp swings in economic activity and asset prices, producing CAPB changes correlated with but not caused by policy actions (example: stock market boom improving CAPB via capital gains and cyclically-adjusted tax revenues).
  - Discretionary CAPB changes can be motivated by responses to cyclical fluctuations (example: governments cutting spending in overheating economies), biasing estimates toward finding expansionary effects.
- Historical-approach advantages:
  - Examines contemporaneous policy documents (Budget Reports, Budget Speeches, central bank reports, Convergence and Stability Programs, IMF reports, OECD Economic Surveys, and country-specific sources) to identify measures motivated primarily by deficit reduction.
  - These deficit-reduction actions are responses to past decisions/conditions and are less likely to be correlated with short-term output developments.
- Sample summary:
  - 173 fiscal policy adjustments in 17 OECD economies between 1978 and 2009.
  - Countries: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, Portugal, Spain, Sweden, the United Kingdom and the United States.
  - Data presented at annual frequency.
- Structure of paper:
  - Part II: determination of motivation and budgetary effects from historical record.
  - Part III: detailed citations for each case.
  - Appendix: tabulation of new series and breakdown into spending and tax measures.

### II. METHODOLOGY
#### A. Motivation of Measures
- Two principal motivations for discretionary fiscal contraction in historical documents:
  - Desire to reduce the budget deficit to shore up government financial sustainability.
  - Desire to restrain domestic demand for cyclical reasons.
- Inclusion rule for database:
  - Record measures only when motivated primarily by desire to reduce the budget deficit.
  - Measures primarily motivated by restraining domestic demand are noted in the paper but excluded from the database.
  - If consolidation measures are followed by offsetting countercyclical discretionary stimulus due to adverse shocks, the original consolidation measures are nonetheless included to avoid selection bias (example: Finland 1992).
  - If consolidation is offset by fiscal actions not primarily motivated by cyclical fluctuations (e.g., supply-side tax cuts motivated by long-run considerations), sum the measures and include consolidation only if the overall change yields budgetary savings (example: U.S. early 1980s: net effect in 1982 was a fiscal expansion, so 1982 not recorded as consolidation).
- Sources examined for motivation include: Budget Reports, Budget Speeches, IMF Recent Economic Developments, IMF Staff Reports, OECD Economic Surveys, country-specific official publications and, in one case, a transcript of a television interview.

#### B. Budgetary Effects
- Use contemporaneous budgetary estimates in historical sources (following Romer and Romer (2010)); retrospective estimates are rarely available.
- Record budgetary effect in the year the measure comes into effect.
- Government concept corresponds to general government unless otherwise stated.
- Scale budgetary impacts in percent of GDP for empirical work.
- Implementation filter:
  - If measures were announced but not implemented (per subsequent historical documents), they are excluded (examples: Japan Fiscal Structural Reform Act suspended end-1998; Italy 1982 package hampered and not recorded).
- Distinguish temporary vs. permanent measures:
  - Temporary measure: positive budgetary impact when in effect, negative when it expires (example: one-year tax increase of $1 billion recorded as $1 billion in year t and –$1 billion in year t+1).
  - Permanent measure: positive impact in year of implementation and zero thereafter (example: permanent tax hike of $1 billion coded as $1 billion in year t and zero thereafter).
- Budgetary effects can be both negative and positive.

### III. COUNTRY-BY-COUNTRY SUMMARY OF FINDINGS
- Purpose: provide quotations and citations from historical record to justify conclusions on motivation and budgetary impact.

#### A. Australia (federal government; fiscal year runs July 1-June 31; A$ allocation convention described)
- Notes on 1978-1984:
  - Fiscal tightening in 1978-1982 motivated primarily by restraining demand and reducing inflation; these are not recorded as deficit-reduction consolidations in database.
  - 1978-1979 Budget: tax hikes totaling $A 1.8 billion in FY 1978-79; $A 686 million corresponded to temporary personal income tax increases (FY 1978-79 only).
  - Based on calendar-year allocation convention: budgetary impacts reported as $A 0.9 billion (0.87 percent of GDP) in 1978; $A 1.1 billion (0.93 percent of GDP) in 1979; $A –122 million (–0.09 percent of GDP) in 1980; 1981 contraction of $A 224 million (0.15 percent of GDP) in 1981.
  - During 1982-84 fiscal policy eased to support recovery from sharp recession.
- Australia 1985:
  - Multiyear program of deficit reduction began in 1985 based on spending cuts, with measures totaling 0.45 percent of GDP in 1985.
  - Trilogy medium-term fiscal commitments aimed at reducing inherited budget deficit by cutting government spending.
  - On May 14, Treasurer announced expenditure cuts totaling $A 1,259 million (0.9 percent of GDP), majority recurrent expenditure; calendar-year allocation recorded as 0.45 percent of GDP in both 1985 and 1986.
- Australia 1986:
  - Fiscal consolidation continued with measures totaling 1.02 percent of GDP, most on spending side.
  - Cumulative savings reported: $A 1.98 billion in FY 1986/87 and $A 1.45 billion in FY 1987/88 from spending cuts (1987 IMF Recent Economic Developments).
  - Tax measures (Medicare levy, company tax, excise duties, wholesale sales tax) yielded cumulative savings of $A 2.08 billion in FY 1986/87 and $A 1.74 billion in 1986/87.
  - Tax reform had cumulative impact on taxes of –$A 1.23 billion in FY 1986/87 and –$A 3.64 billion in FY 1987/88.
  - Spending-side change in savings: $A 1.98 billion in FY 1986/87 and –$A 0.53 billion in FY 1987/88 (1.45–1.98).
  - Revenue-side total change in budgetary savings related to revenue measures and tax reform: $A 0.85 billion in FY 1987/88 and –$A 2.75 billion in FY 1987/88 (–1.90–0.85).
  - Calendar-year allocation in $A billion across 1986-1988:
    - Spend: 0.99 (1.98/2) in 1986; 0.725 (1.98/2–0.53/2) in 1987; –0.265 (–0.53/2) in 1988.
    - Tax: 0.425 (0.85/2) in 1986; –0.525 (0.85/2–1.90/2) in 1987; –0.85 (–1.90/2) in 1988.
  - In percent of GDP across 1986-1988:
    - Spend: 0.40 percent in 1986; 0.26 percent in 1987; –0.08 percent in 1988.
    - Tax: 0.17 percent in 1986; 0.19 percent in 1987; –0.27 percent in 1988.
    - Total: 0.57 percent in 1986; 0.45 percent in 1987; –0.35 percent in 1988.
  - Including 1985 FY 1985/86 spending cuts (0.45 percent of GDP), total fiscal consolidation in 1986 amounted to 1.02 percent of GDP, with spending cuts of 0.85 percent of GDP (0.40+0.45) and tax hikes of 0.17 percent of GDP.
- Australia 1987:
  - Fiscal consolidation totaled 0.90 percent of GDP, with spending cuts of 0.71 percent of GDP and tax hikes of 0.19 percent of GDP.
  - Budget Speech 1987-88 described ongoing savings and commitments to reduce outlays by $A 3,500 million this year producing same reductions next year (savings described as on-going).
  - 1988 IMF Recent Economic Developments reports: gross savings from spending cuts partly offset by new initiatives; overall “policy decisions by the Government in developing the budget reduced forward estimates of outlays by a net $A” (text continues in original source).

*Source: _wp11128 - References (PDF content provided).*

### 2.5 billion (or 0.9 percent of GDP) in 1987/88.” The spending cuts fell mainly on assistance

### _wp11128 - 2.5 billion (or 0.9 percent of GDP) in 1987/88.” The spending cuts fell mainly on assistance

### Australia: fiscal consolidation episodes and calendar-year allocations (selected years)
- 1987
  - Fiscal consolidation implemented in 1987 amounted to 0.90 percent of GDP, with spending cuts of 0.71 percent of GDP (0.26+0.45) and tax increases of 0.19 percent of GDP.
  - Allocation across calendar years: 0.45 percent of GDP in 1987 and 1988, respectively.
- 1988
  - Fiscal consolidation totaled 0.10 percent of GDP, with spending cuts of 0.37 percent of GDP largely offset by tax cuts of 0.27 percent of GDP.
  - Spending cuts amounted to 0.37 percent of GDP (–0.08+0.45); tax cuts amounted to 0.27 percent of GDP.
- 1994
  - Fiscal consolidation totaled 0.25 percent of GDP based entirely on tax measures.
  - The Budget Speech 1994-95 reports a package that “improved the projected outcome for 1996-97 by almost 1¾ percent of GDP.”
  - FY 1994/95 fiscal consolidation amounted to 0.5 percent of GDP due to tax measures; spending increased about 0.4 percent of GDP (Working Nation program) but was not recorded as consolidation in the dataset.
  - Calendar-year allocation: 0.25 percent of GDP in both 1994 and 1995 (0.5/2).
- 1995
  - Multiyear fiscal consolidation continued with measures amounting to 0.50 percent of GDP on the tax side.
  - FY 1995/96 measures included “a second round of wholesale sales tax increases and the bringing forward of company tax payments (total yield equivalent to about ½ percent of GDP).”
  - Calendar-year allocation: 0.25 percent of GDP in both 1995 and 1996; calendar-year 1995 consolidation totaled 0.5 percent (0.25+0.25).
- 1996
  - Fiscal consolidation totaled 0.62 percent of GDP, mainly on the tax side.
  - FY 1996-97 Budget cumulative impact on spending: –$A 2.929 billion in FY 1996-97, –$A 5.197 billion in FY 1997-98, and –$A 4.847 billion in FY 1998–99.
  - Change in saving related to spending measures: $A 2.929 billion in FY 1996-1997 (0.55 percent of GDP), 2.260 billion (5.197–2.929) in FY 1997-98 (0.4 percent of GDP), and –0.350 billion in 1998-99 (–0.06 percent of GDP).
  - FY 1996-97 cumulative impact on tax revenue: $A 0.979 billion in FY 1996-97, $A 1.955 billion in FY 1997-98, and $A 1.524 billion in FY 1998-99.
  - Change in saving related to tax measures: $0.979 billion in FY 1996-1997 (0.18 percent of GDP), 0.976 billion (1.955–0.979) in FY 1997-98 (0.17 percent of GDP), and –0.431 billion in 1998-99 (–0.07 percent of GDP).
  - Calendar-year allocation in percent of GDP:
    - Spend: 0.275 in 1996 (0.55/2); 0.475 in 1997 (0.55/2 + 0.4/2); 0.17 in 1998 (0.4/2 – 0.06/2); –0.03 in 1999 (–0.06/2).
    - Tax: 0.09 in 1996 (0.18/2); 0.175 in 1997 (0.18/2 + 0.17/2); 0.05 in 1998 (0.17/2 – 0.07/2); –0.035 in 1999 (–0.07/2).
    - Total: 0.365 in 1996; 0.65 in 1997; 0.22 in 1998; –0.065 in 1999.
  - Given prior revenue measures (FY 1995/96 = 0.25 percent of GDP), total fiscal consolidation in 1996 amounted to 0.62 percent of GDP, with spending cuts of 0.28 percent of GDP, and tax hikes of 0.34 percent of GDP (0.25+0.09).
- 1997
  - Fiscal consolidation continued and amounted to 0.70 percent of GDP, mostly on the spending side.
  - Additional measures in FY 1997/98 yielded cumulative savings of 0.1 in FY 1997/98, 0.3 in 1998/99, 0.3 in 1999/2000 and 0.3 in 2000/01 (percent of GDP).
  - Impact on change in saving: 0.1 in FY 1997/98, 0.2 (0.3–0.1) in FY 1998/99, and zero thereafter.
  - Calendar-year allocation: 0.05 in 1997 (0.1/2), 0.15 in 1998 (0.1/2 + 0.2/2), 0.1 in 1999 (0.2/2).
  - Including FY 1996/97 measures, 1997 fiscal consolidation: total 0.70 percent of GDP, spending cuts 0.525 percent of GDP (0.1/2+0.475) and tax measures 0.175 percent of GDP.
- 1998
  - Fiscal consolidation totaled 0.37 percent of GDP, almost all on the spending side.
  - Spending cuts of 0.32 percent of GDP (0.17+0.15) and tax measures of 0.05 percent of GDP.
- 1999
  - Small fiscal consolidation of 0.035 percent of GDP based on spending cuts.
  - Implied consolidation in 1999 of 0.035 percent of GDP (–0.065+0.1), with net spending cuts of 0.07 versus a tax impact of –0.035.

### Austria: fiscal consolidation episodes (selected years)
- 1980
  - Fiscal consolidation totaled 0.80 percent of GDP, with spending cuts of 0.69 percent of GDP and tax hikes of 0.11 percent of GDP.
  - Specific measures: spending cuts of S 7.2 billion (0.69 percent of GDP) and tax measures of S 1.2 billion (0.11 percent of GDP).
- 1981
  - Fiscal consolidation totaled 1.56 percent of GDP, with tax hikes of 0.50 percent of GDP and spending cuts of 1.06 percent of GDP.
  - Deficit reduction measures amounted to S 17.5 billion (1.56 percent of GDP), of which 0.50 percent of GDP was due to tax hikes.
  - Spending cuts fell on pensions; tax hikes included VAT rate on energy, a new tax on credit institutions and gasoline stations, and suspension of part of the savings incentive system.
- 1984
  - Fiscal consolidation totaled 2.04 percent of GDP, with tax hikes of 1.30 percent of GDP and spending cuts of 0.74 percent of GDP.
  - Budget introduced tax hikes of S 17.5 billion (1.30 percent of GDP) and spending cuts of S 10 billion (0.74 percent of GDP).
  - Tax measures included VAT rate hikes, a new tax on interest from schilling deposits, increases in road transportation contribution, motor vehicle tax, insurance tax and unemployment and pension insurance contributions.
  - Spending cuts fell mainly on the housing grant and on social benefits.
- 1996
  - Fiscal consolidation totaled 2.41 percent of GDP, with spending cuts of 1.53 percent of GDP and tax hikes of 0.88 percent of GDP.
  - Spending cuts in 1996 amounted to S 38.3 billion (1.53 percent of GDP); additional cut of S 28.4 billion in 1997.
  - Tax hikes of S 22 billion in 1996 (0.88 percent of GDP); additional S 11.3 billion in 1997.
  - Total consolidation amounted to 2.41 percent of GDP (1.53+0.88).
  - Key spending measures: cuts to wages and the number of public employees (including postal workers), and cuts to a number of social transfers and subsidies.
  - Tax measures applied to both direct and indirect taxes.
- 1997
  - Fiscal consolidation totaled 1.56 percent of GDP, with spending cuts of 1.12 percent of GDP and tax hikes of 0.44 percent of GDP.
  - Spending cuts amounted to S 28.4 billion (1.12 percent of GDP) and tax hikes amounted to S 11.3 billion (0.44 percent of GDP).
- 2001
  - Fiscal consolidation totaled 1.02 percent of GDP, with tax hikes of 0.90 percent of GDP and spending cuts of 0.12 percent of GDP.
  - Cumulative budgetary impact of fiscal consolidation measures: Sch. 30.4 billion in 2001 and Sch. 47 billion in 2002.
  - Change in saving due to measures: Sch. 30.4 billion in 2001 (1.02 percent of GDP) and Sch. 16.6 billion in 2002 (47–30.4), or 0.55 percent of GDP.

*Italicized source attribution: IMF Working Paper content extracted from the provided document excerpt.*

### 0.12 percent of GDP in 2001 and 0.55 percent of GDP in 2002 (p. 10). The change in saving

### _wp11128 - 0.12 percent of GDP in 2001 and 0.55 percent of GDP in 2002 (p. 10). The change in saving

### Austria (2001–2002)
- Fiscal consolidation in 2001:
  - Change in saving due to tax measures (direct and indirect): 0.90 percent of GDP in 2001 (p. 10).
  - Other measured change: 0.12 percent of GDP in 2001.
  - Total fiscal consolidation in 2001: 1.02 percent of GDP (0.12+0.90).
- Fiscal consolidation in 2002:
  - Fiscal consolidation totaled 0.55 percent of GDP based on spending cuts.
  - Motivation: continuation of the deficit-reduction program started in 2001; authorities intended to stick to the previously mapped out fiscal adjustment path for credibility of policies (2002 IMF Staff Report, p. 10).
  - Measures in 2002: 0.55 percent of GDP based on spending cuts.

### Belgium (selected years 1982–1997)
- Belgium 1982:
  - Fiscal consolidation totaled 1.66 percent of GDP, based entirely on spending cuts.
  - Spending cuts: BF 69 billion (1.66 percent of GDP), with more than half on social benefits and the rest on subsidies to public enterprises, education, and public employment and salaries (1982 IMF Recent Economic Developments, p. 22).
- Belgium 1983:
  - Fiscal consolidation totaled 1.79 percent of GDP.
  - Spending cuts: 1.10 percent of GDP.
  - Tax hikes: 0.69 percent of GDP (VAT rate rise from 17 to 19 percent with estimated savings BF 15 billion, about 0.40 percent of GDP; social security contributions BF 6 billion, 0.16 percent of GDP; taxes on petrol products BF 5 billion, 0.13 percent of GDP).
- Belgium 1984:
  - Fiscal consolidation totaled 0.69 percent of GDP.
  - Spending cuts: 0.41 percent of GDP (BF 19.7 billion).
  - Tax hikes: 0.28 percent of GDP (BF 13.4 billion).
  - March 1984 program produced additional 1985 savings: BF 36.8 billion (0.73 percent of GDP) in higher taxes and BF 44.6 billion (0.88 percent of GDP) in lower spending.
- Belgium 1985:
  - Fiscal consolidation totaled 1.61 percent of GDP.
  - Spending cuts: 0.88 percent of GDP.
  - Tax measures: 0.73 percent of GDP.
- Belgium 1987:
  - Fiscal consolidation totaled 2.80 percent of GDP, with spending cuts of 2.80 percent of GDP.
  - Budgetary impact of consolidation measures: BF 130 billion (2.4 percent of GDP) plus additional BF 21 billion (0.40 percent of GDP) implemented in 1987, totaling 2.80 percent of GDP (2.40+0.40).
- Belgium 1990:
  - Fiscal consolidation totaled 0.60 percent of GDP.
  - Spending cuts: 0.20 percent of GDP (BF 11 billion).
  - Tax hikes: 0.40 percent of GDP (BF 25 billion from corporate tax base-broadening BF 10 billion (0.15 percent); non-application of indexation BF 6 billion (0.10 percent); increase in excise BF 3 billion (0.05 percent); speeding up withholding BF 5 billion (0.07 percent); road tax BF 1 billion, less than 0.02 percent).
- Belgium 1992:
  - Fiscal consolidation totaled 1.79 percent of GDP.
  - Spending cuts: 0.80 percent of GDP (BF 59.5 billion).
  - Tax hikes: 0.99 percent of GDP (BF 74 billion).
  - Note: about half of tax hikes and half of spending cuts were temporary, implying a 1993 budgetary impact of –0.89 percent of GDP (–0.50 due to taxes and –0.40 due to spending).
  - Tax measures: primarily indirect taxes (VAT and excise duties), new taxes on new cars, pleasure boats and aircraft, and increased rate of general contributions to the health care scheme.
  - Spending cuts: public investment, national defense, compensation of civil servants.
- Belgium 1993:
  - Fiscal consolidation totaled 0.92 percent of GDP.
  - Spending cuts: 0.49 percent of GDP.
  - Tax hikes: 0.43 percent of GDP.
  - Components:
    - 1993 Budget (summer 1992): spending cuts BF 60 billion; tax hikes BF 40.5 billion.
    - October 1992 supplementary revenue measures for 1993: BF 22 billion (BF 10 billion asset sales; BF 12 billion tax measures — only tax measures recorded).
    - April 1993 budget control exercise full-year impact BF 105 billion; calendar-year 1993 impact recorded as 30 percent of full-year: spending cuts BF 7.9 billion (26.3×30 percent) in 1993 and BF 18.4 billion in 1994; tax hikes BF 19.1 billion (63.8×30 percent) in 1993 and BF 44.6 billion in 1994.
    - Aggregate 1993 spending cuts initially BF 67.9 billion (60+7.9) or 0.89 percent of GDP, but expiration of 0.40 percent of GDP of temporary 1992 cuts reduces 1993 spending impact to 0.49 percent of GDP (0.89–0.40).
    - Aggregate 1993 tax hikes initially BF 71.6 billion (40.5+12+19.1) or 0.93 percent of GDP, but expiration of 0.50 percent of GDP of temporary 1992 tax hikes reduces 1993 tax impact to 0.43 percent of GDP (0.93–0.50).
- Belgium 1994:
  - Fiscal consolidation totaled 1.15 percent of GDP.
  - Spending cuts: 0.60 percent of GDP (0.23 percent from measures introduced in 1993 with full impact in 1994; plus BF 30 billion = 0.37 percent of GDP in 1994 from new measures).
  - Tax hikes: 0.55 percent of GDP (BF 44.6 billion).
  - Additional 1994 measures generated BF 50 billion in savings; BF 30 billion (0.37 percent of GDP) current spending cuts and BF 20 billion corresponded to asset sales and other operations excluded from dataset.
- Belgium 1996:
  - Fiscal consolidation totaled 1.00 percent of GDP.
  - Spending cuts: 0.50 percent of GDP.
  - Tax hikes: 0.50 percent of GDP (revenue measures 0.90 percent of GDP including 0.10 percent from sales of buildings excluded from dataset).
  - One-off measures: 0.50 percent of GDP, allocated equally across spending and tax measures.
  - Reported budgetary impact: 1.30 percent of GDP in 1996 (0.50 spending cuts and 0.80 tax hikes); and –0.50 percent of GDP in 1997 (–0.25 percent each due to tax and spending measures).
- Belgium 1997:
  - Fiscal consolidation amounted to 0.91 percent of GDP.
  - Spending cuts: 0.50 percent of GDP.
  - Tax hikes: 0.41 percent of GDP.
  - 1997 Budget corrective measures worth BF 80 billion (1 percent of GDP) split evenly between spending cuts and revenue increases; spending measures: BF 17 billion (0.21 percent) cuts in subsidies and military expenditure and BF 23 billion (0.29 percent) cuts in health care and other social allowances; revenue measures: BF 33 billion in tax measures (0.41 percent of GDP) and BF 7 billion in asset sales.

### Canada (selected years 1984–1985)
- General:
  - Fiscal year is April-March; allocation convention: a tax hike worth C$1 billion in 1997/98 is allocated C$¾ billion in 1997 and C$¼ billion in 1998.
- Canada 1984:
  - Fiscal consolidation totaled 0.27 percent of GDP based on tax hikes.
  - April 1983 Budget introduced tax hikes motivated by deficit reduction with budgetary impact of C$ 1.2 billion (0.27 percent of GDP) in 1984, including hikes in personal income and consumption taxes.
  - The 1983 Budget also introduced countercyclical initiatives (additional public capital projects and tax incentives) that are not subtracted from the deficit-driven consolidation measure.
- Canada 1985:
  - Fiscal consolidation totaled 1.03 percent of GDP.
  - Tax hikes: 0.53 percent of GDP.
  - Spending cuts: 0.50 percent of GDP.
  - Motivation: the Fiscal Plan and May 1985 Budget identified reducing a large budget deficit as the principal motivation; measures aimed at deficit reduction worth C$ 2.3 billion in FY 1985-86.

*Source: _wp11128 (excerpts from PDF content).*

### 1.4 billion and spending cuts of C$ 0.8 billion (Table 1). In addition, measures motivated by

### _wp11128 - 1.4 billion and spending cuts of C$ 0.8 billion (Table 1). In addition, measures motivated by

### Overview
- The excerpt documents Canada’s fiscal consolidation measures and motivations from FY 1985-86 through FY 1997-98, focusing on budgetary impacts allocated to calendar years using the authors’ convention.
- Motivations reported include deficit reduction, long-term efficiency and structural reform (notably the June 1987 tax reform), anti-inflation measures (e.g., the “6&5” federal wage restraint program), and some cyclically-motivated contractionary measures in 1981–1983.
- Where noted, some savings from consolidation were offset by budgetary costs of other measures motivated by long-term considerations (e.g., tax reform transitional costs, temporary spending).

### Motivations and policy context
- Anti-inflation: The “6&5” program capped federal wage increases at 6 percent (year beginning July 1, 1982) and 5 percent (following year) and is credited with helping reduce inflation from almost 12 percent in June 1982 to 4.5 percent at end-1983.
- Deficit and debt reduction: Recurrent theme across budgets (mid-1980s through 1990s) with explicit numeric deficit targets introduced in the 1994 Budget (“deficit-to-GDP target of 3 percent in 1996-97”) and continued emphasis on hitting and going beyond targets in later budgets.
- Tax reform: June 1987 comprehensive tax reform intended to be revenue neutral, implemented in two stages; the first stage (to be completed by FY 1989/90) reduced statutory tax rates and broadened bases, generating a budgetary cost in initial years.

### Year-by-year fiscal consolidation (selected calendar-year allocations and key figures)
- 1985
  - Total savings achieved in 1985: C$ 5.0 billion (1.03 percent of GDP).
  - Tax side: C$ 2.6 billion (0.53 percent of GDP).
  - Spending side: C$ 2.4 billion (0.50 percent of GDP).
  - Budgetary impact of deficit-reduction measures in 1985: C$ 5.2 billion (tax hikes C$ 2.8 billion; spending cuts C$ 2.4 billion).
- 1986
  - Fiscal consolidation totaled 0.99 percent of GDP.
  - Tax hikes: 0.84 percent of GDP (C$ 4.3 billion reported net; table allocation: tax hikes of C$ 4.8 billion).
  - Spending cuts: 0.15 percent of GDP (C$ 0.7 billion reported net; table allocation: spending cuts of C$ 0.8 billion).
  - Budgetary impact of deficit-reduction measures in 1986 (calendar-year): C$ 5.5 billion (tax hikes C$ 4.8 billion; spending cuts C$ 0.8 billion).
  - Net total savings in 1986 after offsetting costs: C$ 5.0 billion (0.99 percent of GDP), with C$ 4.3 billion (0.84 percent of GDP) on tax side and C$ 0.7 billion (0.14 percent of GDP) on spending side.
- 1987
  - Fiscal consolidation totaled 0.28 percent of GDP.
  - Tax hikes: 0.14 percent of GDP.
  - Spending cuts: 0.14 percent of GDP.
  - Budgetary impact of deficit-reduction measures in 1987 (calendar-year): C$ 3.5 billion (tax hikes C$ 2.8 billion; spending cuts C$ 0.8 billion).
  - Budgetary cost of first stage of June 1987 tax reform in 1987: C$ 2.0 billion.
  - Net fiscal consolidation in 1988 (after netting tax reform cost): C$ 1.5 billion (0.28 percent of GDP) — tax hikes C$ 0.8 billion (0.14 percent); spending reductions C$ 0.8 billion (0.14 percent).
- 1988
  - Fiscal consolidation totaled 0.30 percent of GDP.
  - Tax hikes: 0.33 percent of GDP.
  - Spending increase: 0.03 percent of GDP.
  - 1988 Budget introduced tax hikes with budgetary impact of C$ 275 million in FY 1988-89.
  - Measures from previous budgets raised FY 1988-89 impact to C$ 685 million (savings C$ 35 million spending; C$ 650 million tax).
  - Budgetary impact of deficit-reduction measures in 1988 (calendar-year): C$ 1.3 billion (tax hikes C$ 1.0 billion; spending cuts C$ 0.3 billion).
  - Additional long-run measures generated C$ 0.6 billion in 1988 (reflecting tax-base broadening from June 1987 reform).
  - Overall net fiscal consolidation in 1988: C$ 1.8 billion (0.30 percent of GDP) — tax hikes C$ 2.0 billion (0.33 percent); spending increase C$ 160 million (0.03 percent).
- 1989
  - Fiscal consolidation totaled 0.31 percent of GDP.
  - Tax hikes: 0.24 percent of GDP.
  - Spending cuts: 0.08 percent of GDP.
  - 1989 Budget introduced tax hikes motivated by deficit reduction of C$ 3.7 billion in FY 1989-90.
  - 1989 Budget cut spending by C$ 1.4 billion in FY 1989-90.
  - Budgetary impact in 1989 (calendar-year): C$ 4.0 billion (tax hikes C$ 3.0 billion; spending cuts C$ 1.1 billion).
  - Measures from previous budgets (mainly June 1987 reform) had a budgetary cost of C$ 1.9 billion in 1989.
  - Net fiscal consolidation in 1989 after offset: C$ 2.1 billion (0.31 percent of GDP) — tax hikes C$ 1.6 billion (0.24 percent); spending cuts C$ 0.6 billion (0.08 percent).
- 1990
  - Fiscal consolidation totaled 0.86 percent of GDP.
  - Tax hikes: 0.57 percent of GDP.
  - Spending cuts: 0.29 percent of GDP.
  - December 1989 Update and February 1990 Budget introduced spending cuts with budgetary impact of C$ 1.9 billion in FY 1990-91.
  - April 1989 Budget spending cuts raised total FY 1990-91 spending cuts to C$ 2.4 billion.
  - April 1989 Budget introduced tax hikes with budgetary impact of C$ 3.3 billion in 1990.
  - Budgetary impact in 1990 (calendar-year): C$ 5.5 billion (spending cuts C$ 2.1 billion; tax hikes C$ 3.4 billion).
  - Measures from previous budgets yielded additional budgetary savings of C$ 0.3 billion in 1991 (second stage of June 1987 reform).
  - Overall fiscal consolidation in 1990: C$ 5.8 billion (0.86 percent of GDP) — spending cuts C$ 2.0 billion (0.29 percent); tax increases C$ 3.9 billion (0.57 percent).
- 1991
  - Fiscal consolidation totaled 0.40 percent of GDP.
  - Spending cuts: 0.27 percent of GDP.
  - Tax hikes: 0.13 percent of GDP.
  - Spending cuts motivated by deficit reduction implemented in FY 1991-92 had budgetary impact of C$ 2.5 billion (C$ 1.0 billion introduced in February 1991 Budget; remainder from earlier measures).
  - Tax hikes from April 1989 Budget added C$ 25 million in FY 1991-92.
  - Budgetary impact of deficit-reduction measures in 1991 (calendar-year): net C$ 3.3 billion (spending cuts C$ 2.5 billion; tax hikes C$ 0.8 billion).
  - Measures from previous budgets had a budgetary cost of C$ 0.5 billion in 1991 (mainly temporary spending associated with 1991 sales tax reform).
  - Net fiscal consolidation in 1992 (after offset): C$ 2.8 billion (0.40 percent of GDP) — spending cuts C$ 1.9 billion (0.27 percent); tax increases C$ 0.9 billion (0.13 percent).
- 1992
  - Fiscal consolidation totaled 0.21 percent of GDP.
  - Spending cuts: 0.22 percent of GDP.
  - Tax reduction: 0.01 percent of GDP.
  - February 1992 Budget targeted reduction of deficit to $27.5 billion in 1992-93 (from $31.4 billion in 1991-92) and committed to cutting spending by $1 billion in 1992-93 and $7 billion over five years.
  - Spending cuts implemented in FY 1992-93 had incremental budgetary impact of C$ 1.0 billion.
  - Budgetary impact in 1992 (calendar-year) of these and previous cuts: C$ 1.3 billion.
  - Other long-run measures generated additional net budgetary yield of 177 million in 1992 (some spending cuts and a small tax reduction reflecting 1991 sales tax reform).
  - Overall fiscal consolidation in 1992: C$ 1.5 billion (0.21 percent of GDP) — spending cuts C$ 1.6 billion (0.22 percent); tax reductions C$ 63 million (0.01 percent).
- 1993
  - Fiscal consolidation totaled 0.35 percent of GDP.
  - Spending cuts: 0.36 percent of GDP.
  - Tax reduction: 0.01 percent of GDP.
  - FY 1993-94 spending cuts had budgetary impact of C$ 3.1 billion, of which C$ 2.6 billion due to measures from December 1992 Economic Statement and April 1993 Budget.
  - Net budgetary impact in 1993 (calendar-year): C$ 2.6 billion.
  - Overall percent-of-GDP measures repeated above.
- 1994
  - Fiscal consolidation totaled 0.49 percent of GDP.
  - Spending cuts: 0.45 percent of GDP.
  - Tax hikes: 0.04 percent of GDP.
  - FY 1994-95 spending cuts budgetary impact: C$ 3.3 billion (C$ 2.2 billion introduced in February 1994 Budget).
  - FY 1994-95 tax hikes motivated by deficit reduction: C$ 0.6 billion (personal and corporate income tax increases).
  - Additional previous long-run measures added C$ 71 million in FY 1994-95.
  - Net budgetary impact in 1994 (calendar-year): C$ 3.8 billion (0.49 percent of GDP) — spending cuts C$ 3.5 billion (0.45 percent); tax hikes C$ 279 million (0.04 percent).
- 1995
  - Fiscal consolidation totaled 0.99 percent of GDP.
  - Spending cuts: 0.81 percent of GDP.
  - Tax hikes: 0.18 percent of GDP.
  - Cumulative savings over next two fiscal years in 1995 Budget: $15.6 billion (spending cuts accounting for $13.4 billion).
  - FY 1995-96 spending cuts budgetary impact: C$ 7.6 billion (C$ 3.9 billion introduced in 1995 Budget).
  - FY 1995-96 tax hikes: C$ 1.8 billion (C$ 0.9 billion introduced in 1995 Budget).
  - Budgetary impact in 1995 (calendar-year): C$ 8.0 billion (0.99 percent of GDP) — spending cuts C$ 6.6 billion (0.81 percent); tax hikes C$ 1.4 billion (0.18 percent).
- 1996
  - Fiscal consolidation totaled 0.97 percent of GDP.
  - Spending cuts: 0.88 percent of GDP.
  - Tax hikes: 0.09 percent of GDP.
  - FY 1996-97 spending cuts budgetary impact: C$ 7.4 billion (C$ 56 million introduced in 1996 Budget; remainder from earlier measures).
  - FY 1996-97 tax hikes: C$ 470 million (all introduced in previous budgets).
  - 1996 Budget introduced additional spending C$ 160 million in FY 1996-97 for long-run considerations.
  - Net budgetary impact in 1996 (calendar-year), net of long-run measures: C$ 8.1 billion (0.97 percent of GDP) — spending cuts C$ 7.4 billion (0.88 percent); tax hikes C$ 0.8 billion (0.09 percent).
- 1997
  - Fiscal consolidation totaled 0.47 percent of GDP.
  - Spending cuts: 0.47 percent of GDP.
  - Tax measures: 0.01 percent of GDP.
  - FY 1997-98 impact from prior spending cuts: C$ 3.5 billion.
  - FY 1997-98 impact from prior tax hikes: C$ 165 million.
  - Part of savings offset by cost of other long-run initiatives with budgetary cost C$ 0.7 billion in FY 1997-98.

### Key patterns and fiscal arithmetic highlighted
- Repeated emphasis on deficit reduction as the primary motivation for consolidation from mid-1980s through 1990s.
- Where provided, calendar-year allocations follow the authors’ stated convention and often differ from fiscal-year labels in original budgets.
- The June 1987 tax reform produced an initial budgetary cost (C$ 2.0 billion in 1987) and later-stage impacts (including a second stage affecting 1991 and beyond).
- Offsetting effects: many years show net consolidation smaller than gross deficit-reduction measures because of budgetary costs from long-run initiatives or the end of one-time spending reductions.

*Source: Excerpt from IMF working paper _wp11128 (extract provided).*

### 98. Much of this cost related to tax cuts and spending increases introduced in the 1997

### _wp11128 - 98. Much of this cost related to tax cuts and spending increases introduced in the 1997

### Canada — 1997 Budget and fiscal consolidation
- Context:
  - Much of the budgetary cost in 1997 related to tax cuts and spending increases introduced in the 1997 Budget, which aimed at promoting long-term growth through investment in education and innovation (1997 Budget Plan, Table 4.1), and at improving social equity (1997 Budget Plan, Tables 5.1 and A6.1).
  - The authors allocate budgetary effects to calendar years using their convention; they net out long-run initiatives from deficit-reduction measures.
- Fiscal consolidation (net of other long-run initiatives) in 1997:
  - Total budgetary impact: C$ 4.2 billion (0.47 percent of GDP)
  - Spending cuts: C$ 4.1 billion (0.47 percent of GDP)
  - Tax hikes: C$ 46 million (0.01 percent of GDP)
- Note on 1998-99:
  - The budgetary impact of deficit-reduction measures in 1998-99 was offset by budgetary costs of other initiatives with long-term motivation (e.g., tax reform).
  - The 1998 Budget announced that “Over the next three years, $7 billion in tax relief is being provided to Canadians” (1998 Budget in Brief, p. 6) motivated by long-run restructuring of the tax system rather than short-term stimulus.
  - Net of these long-run measures, there was no deficit-driven fiscal consolidation in 1998-99.

### Canada — Table 1 (Selected budgetary figures and aggregates)
- Table source: Canada Department of Finance, Budget, various years, and authors’ calculations.
- Selected calendar-year aggregates and percent-of-GDP entries (preserve exact figures as presented):
  - Change in Saving: Deficit-driven Measures (Calendar Year totals):
    - 1984: 1,215
    - 1985: 5,233
    - 1986: 5,533
    - 1987: 3,506
    - 1988: 1,250
    - 1989: 3,989
    - 1990: 5,511
    - 1991: 3,295
    - 1992: 1,326
    - 1993: 2,550
    - 1994: 3,704
    - 1995: 7,979
    - 1996: 8,267
    - 1997: 4,745
  - Change in Saving: Other Long-term Policy Measures (Calendar Year totals):
    - 1984: 0
    - 1985: -229
    - 1986: -448
    - 1987: -1,957
    - 1988: 585
    - 1989: -1,926
    - 1990: 332
    - 1991: -536
    - 1992: 177
    - 1993: 171
    - 1994: 41
    - 1995: -120
    - 1996: -580
  - Change in Saving: Total (Calendar Year totals):
    - 1984: 1,215
    - 1985: 5,004
    - 1986: 5,086
    - 1987: 1,549
    - 1988: 1,835
    - 1989: 2,062
    - 1990: 5,843
    - 1991: 2,759
    - 1992: 1,503
    - 1993: 2,552
    - 1994: 3,775
    - 1995: 8,020
    - 1996: 8,147
    - 1997: 4,165
  - Total (percent of GDP) — Calendar Year totals:
    - Total: 0.27 1.03 0.99 0.28 0.30 0.31 0.86 0.40 0.21 0.35 0.49 0.99 0.97 0.47
    - Spend: 0.00 0.50 0.15 0.14 -0.03 0.08 0.29 0.27 0.22 0.36 0.45 0.81 0.88 0.47
    - Tax: 0.27 0.53 0.84 0.14 0.33 0.24 0.57 0.13 -0.01 -0.01 0.04 0.18 0.09 0.01
  - Memorandum — Nominal GDP (selected years):
    - 1984: 449,582
    - 1985: 485,714
    - 1986: 512,541
    - 1987: 558,949
    - 1988: 613,094
    - 1989: 657,728
    - 1990: 679,921
    - 1991: 685,367
    - 1992: 700,480
    - 1993: 727,184
    - 1994: 770,873
    - 1995: 810,426
    - 1996: 836,864
    - 1997: 882,733

### Denmark — selected episodes of fiscal consolidation
- Denmark 1983:
  - Total fiscal consolidation: 2.77 percent of GDP
  - Spending cuts: 1.85 percent of GDP (DKr 10 billion in 1983; spending cuts introduced in 1983 amounted to DKr 16 billion with DKr 10 billion in 1983 and DKr 6 billion in 1984)
  - Tax hikes: 0.92 percent of GDP (DKr 5 billion in 1983)
  - Measures included cuts in public sector wages and salaries, a freeze in social benefit levels, wealth tax rate hike on pension funds and insurance companies, higher contribution rates for unemployment insurance, and a hike in local authorities’ income tax rates.
- Denmark 1984:
  - Total fiscal consolidation: 2.38 percent of GDP
  - Spending cuts: 1.71 percent of GDP (DKr 10.2 billion: DKr 6 billion carryover from 1983 + DKr 3.1 billion agreed in November 1983 + DKr 1.1 billion in April 1984)
  - Tax hikes: 0.67 percent of GDP (DKr 4.0 billion: DKr 3.7 billion + DKr 0.3 billion)
- Denmark 1985:
  - Total fiscal consolidation: 1.54 percent of GDP
  - Spending cuts: 0.77 percent of GDP (Kr. 5 billion in 1985)
  - Tax hikes: 0.77 percent of GDP (one-off settlement by taxpayers of underpayment of PAYE-taxes yielding about DKr 5 billion in 1985)
  - Note: The end of the one-time tax measure implied a budgetary impact of –DKr 5 billion in 1986 (–0.72 percent of GDP).
- Denmark 1995:
  - Fiscal consolidation totaled 0.30 percent of GDP
  - Implemented mainly through increases in indirect taxes and social security contributions

### Finland — selected episodes of fiscal consolidation
- Finland 1992:
  - Fiscal consolidation totaled 0.91 percent of GDP based on spending cuts
  - Spending cuts: Fmk 4 billion in the 1992 Budget + Fmk 484 million in the June 1992 Supplementary Budget = Fmk 4.484 billion (4 + 0.484), or 0.91 percent of GDP
  - Cuts affected education, health care, and employment promotion
- Finland 1993:
  - Fiscal consolidation totaled 3.71 percent of GDP based on spending cuts
  - Spending cuts: Fmk 10 billion (April 1992 measures impacting 1993) + Fmk 8.5 billion (October 1992 measures) = Fmk 18.5 billion, or 3.71 percent of GDP
  - Motivated by the 1992 multi-year deficit-reduction plan and a 1993 goal of stabilizing central government debt-to-GDP below 70 percent by 1997
- Finland 1994:
  - Fiscal consolidation totaled 3.46 percent of GDP
  - Spending cuts: Fmk 14.5 billion (2.77 percent of GDP)
  - One-off tax-refund postponement: Fmk 3.6 billion (0.69 percent of GDP) in 1994 (postponed payment of tax refunds due in 1994 to 1995)
  - Total: 2.77 + 0.69 = 3.46 percent of GDP
- Finland 1995:
  - Fiscal consolidation amounted to 1.65 percent of GDP
  - Spending cuts: 2.28 percent of GDP (permanent making of Fmk 11.5 billion of 1995 Budget cuts + additional spending cuts approved in 1996 Budget with a budgetary impact in 1995 of Fmk 1.5 billion (0.26 percent of GDP) and in 1996 of Fmk 8.65 billion (1.47 percent of GDP))
  - Temporary tax measure expiration: –0.63 percent of GDP (payment of 1994 tax refund postponed to 1995 had a budgetary impact of –Fmk 3.6 billion (0.63 percent of GDP) in 1995)
  - Net consolidation: 1.65 percent of GDP

*Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2011/_wp11128.pdf*

### 2.28 percent of GDP (2.02+0.26) partly offset by the tax refund of 0.63 percent of GDP.

### _wp11128 - 2.28 percent of GDP (2.02+0.26) partly offset by the tax refund of 0.63 percent of GDP.

### Finland: consolidation episodes and motivations
- Finland 1996
  - Fiscal consolidation totaled 1.47 percent of GDP based on spending cuts.
  - Motivation: debt reduction and the need to meet the Maastricht criteria.
  - The 1996 Budget (adopted in June 1995) introduced spending cuts with a budgetary impact of 1.47 percent of GDP in 1996.
  - Improvement in general government finances in 1996 allowed Finland to meet the EMU budget deficit and government debt criteria.

- Finland 1997
  - Fiscal consolidation totaled 0.23 percent of GDP.
  - Composition: spending cuts of 0.93 percent of GDP partly offset by tax cuts of 0.70 percent of GDP (net consolidation = 0.23 percent of GDP).
  - Motivation: continued debt-reduction objectives defined in 1995 and 1996.
  - 1997 Budget included new spending cuts worth Fmk 6 billion (0.93 percent of GDP).
  - Tax measures: income tax cuts of Fmk 5.5 billion partly financed by a Fmk 1 billion hike in environment-based taxes → net tax cut Fmk 4.5 billion (5.5–1), or 0.70 percent of GDP.
  - Treatment: the tax cut was primarily driven by long-run supply-side motivation and thus its budgetary impact is subtracted from the size of fiscal consolidation.

- Notes on 1998–2000 (Finland)
  - Late 1997–1999: Acceleration of economic growth and rapid rise of asset prices and inflation motivated fiscal policy tightening in 1998.
  - 1998: Freeze in state budget expenditure confirmed in the 1998 budget and in the 1999 budget guidelines.
  - 1998: Additional spending cuts of around Mk 2 billion (½ percent of GDP) included in the 1998 budget to limit overheating.
  - 1999: Draft 1999 budget included FIM 4 billion (0.6 percent of GDP) additional spending cuts aimed at limiting overheating and included income tax cuts of around FIM 4 billion; spending cuts motivated by restraining domestic demand so 1999 is not recorded as deficit-reduction consolidation.
  - 2000: Additional tax cuts occurred motivated by long-run considerations; budget surplus increase in 2000 mainly due to sharp upswing in activity and substantial one-off revenues (rise in general government tax revenues on income and wealth was exceptionally strong (23 percent)). Spending cuts in 2000 amounted to about 2 percent of GDP and are characterized as countercyclical tightening.

### France: consolidated measures, years, and fiscal impacts
- France 1979
  - Fiscal consolidation totaled 0.85 percent of GDP based on tax increases.
  - Measure: hike in social security contributions raised revenue by F 22 billion (0.85 percent of GDP).
  - Motivation: restore financial integrity of the social security system and deficit reduction.

- France 1987
  - Fiscal consolidation totaled 0.26 percent of GDP.
  - Composition: spending cuts of 0.76 percent of GDP partly offset by tax reductions of 0.50 percent of GDP.
  - Spending cuts: F 30 billion savings from government payroll reductions + F 10 billion cuts to health care spending (Plan Seguin) → total F 40 billion (0.76 percent of GDP).
  - Tax side: temporary tax hikes (emergency plan) with budgetary impact F 21.3 billion (0.40 percent of GDP) over 12 months produced allocation of 0.20 percent of GDP in 1987 and –0.20 percent of GDP in 1989; simultaneous tax cuts of F 37 billion in 1987 (0.70 percent of GDP) motivated by long-term considerations → net tax cut of 0.50 percent of GDP in 1987 (0.20–0.70).
  - Net effect: fiscal consolidation 0.26 percent of GDP (0.76 + –0.50).

- France 1989
  - The temporary tax hike introduced in 1987 expired in 1989 with a budgetary impact of –0.20 percent of GDP.

- France 1991
  - Fiscal consolidation totaled 0.25 percent of GDP based entirely on spending cuts.
  - Context: government commitment to reduce the budget deficit despite Gulf war spending (~F 10 billion) and slowdown in activity.
  - Measures: spending cuts of F 10.2 billion decided in March; additional F 17 billion package in May with F 10 billion permanent expenditure cuts → net spending cuts in 1991 (net of Gulf war increase) = F 17.2 billion (–10+10.2+17) = 0.25 percent of GDP.
  - Of this, F 7 billion (17–10) = 0.1 percent of GDP was temporary; budgetary impact recorded as 0.25 percent of GDP in 1991 and –0.1 percent of GDP in 1992.

- France 1992
  - Temporary spending cuts introduced in 1991 expired in 1992 with a budgetary impact of –0.10 percent of GDP.

- France 1995
  - Fiscal consolidation totaled 0.28 percent of GDP.
  - Composition: tax hikes of 0.43 percent of GDP partly offset by spending increases of 0.15 percent of GDP (net consolidation = 0.28 percent of GDP).
  - Context: multi-year fiscal consolidation plan to reduce general government deficit from 6.0 percent of GDP in 1994 to 3.0 percent in 1997; Guidance Law on the Control of Public Finances (January 1994) established stabilization and reduction of government debt as key objective.
  - Measures: Supplementary Budget in June included tax hikes estimated at F 33 billion and a net increase in spending of F 15 billion; additional spending initiatives later in the year amounted to F 16.2 billion → spending initiatives not due to domestic activity, so F 31.2 billion (15+16.2) subtracted from size of consolidation. Supplementary Budget in November introduced F 20 billion in expenditure cuts in 1995.
  - Overall fiscal consolidation in 1995: F 21.8 billion (0.28 percent of GDP) with F 33 billion in tax hikes (0.43 percent of GDP) partly offset by a net spending increase of F 11.2 billion (31.2–20), or 0.15 percent of GDP.

- France 1996
  - Fiscal consolidation totaled 1.33 percent of GDP.
  - Composition: tax hikes of 0.86 percent of GDP and spending cuts of 0.47 percent of GDP (total = 1.33 percent of GDP).
  - Motivation: deficit reduction and the need to meet the Maastricht criteria.
  - Tax measures: tax hikes introduced in second half of 1995 had full-year budgetary impact of F 70 billion in 1996 (change in saving of F 37 billion relative to 1995's F 33 billion); additional tax measures in 1996 valued at F 10½ billion; tax hikes in 1996 estimated at F 48 billion (0.59 percent of GDP) plus social security reform tax effects.
  - Social security reform (announced Nov 1995, adopted in 1996): generated savings estimated at 0.50 percent of GDP in 1996 and 0.70 percent of GDP in 1997; roughly half due to spending cuts. Reform produced spending cuts cumulative 0.22 percent of GDP in 1996 and 0.31 percent of GDP in 1997; tax hikes due to reform cumulative 0.28 percent of GDP in 1996 and 0.39 percent of GDP in 1997. Change in saving due to the reform was 0.50 percent of GDP in 1996 (0.22+0.28) and 0.20 percent of GDP in 1997 (0.31+0.39–0.50).
  - Total spending cuts in 1996 including reform: 0.47 percent of GDP (0.25+0.22).
  - Total tax hikes in 1996 including reform: 0.86 percent of GDP (0.59+0.28, rounding).

- France 1997
  - Fiscal consolidation totaled 0.50 percent of GDP.
  - Composition: tax hikes of 0.41 percent of GDP and spending cuts of 0.09 percent of GDP.
  - Context: continued effort to meet Maastricht criteria.
  - Political change: following May/June 1997 elections, new government announced spending increases in 1997 of some 0.1 percent of GDP; when an audit forecast a fiscal deficit of 3.5 to 3.7 percent of GDP in 1997, corrective measures of 0.4 percent of GDP were decided (spending cuts ~0.1 percent of GDP; tax hikes ~0.3 percent of GDP based on a temporary increase in corporation tax).
  - The temporary corporation tax hike was later reduced by one-third in 1999 and terminated in 2000.

*Source: _wp11128 - 2.28 percent of GDP (2.02+0.26) partly offset by the tax refund of 0.63 percent of GDP. — https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2011/_wp11128.pdf*

### 0.30 percent of GDP in 1997, –0.10 percent of GDP in 1999, and –0.20 percent of GDP in

### _wp11128 - 0.30 percent of GDP in 1997, –0.10 percent of GDP in 1999, and –0.20 percent of GDP in 2000

### France: 1997–2000 — measures, impacts, and accounting
- 1997: Budgetary impact of measures introduced in 1997 totaled 0.30 percent of GDP.
- 1999: Partial expiration of a temporary tax hike introduced in 1997 had a budgetary impact of –0.10 percent of GDP in 1999.
- 2000: Full expiration of a temporary tax hike introduced in 1997 had a budgetary impact of –0.20 percent of GDP in 2000.
- Social security reform adopted in 1996:
  - Budgetary impact of the reform was 0.20 percent of GDP in 1997.
  - Reform composition in 1997: spending cuts of 0.09 percent of GDP and tax hikes of 0.11 percent of GDP (see entry for 1996).
- Aggregate accounting for France in 1997 (from the listed measures):
  - Spending cuts amounted to 0.09 percent of GDP in 1997 (–0.10 + 0.10 + 0.09).
  - Tax hikes amounted to 0.41 percent of GDP (0.30 + 0.11).
  - Fiscal consolidation totaled 0.50 percent of GDP (0.09 + 0.41).

### Germany: 1982–2000 — fiscal consolidation episodes, magnitudes, and motivations
- Germany 1982:
  - Fiscal consolidation totaled 1.18 percent of GDP.
  - Tax hikes: 0.56 percent of GDP (of which 0.41 percent of GDP were temporary (1982-1983 only)).
  - Spending cuts: 0.62 percent of GDP (DM 11.3 billion).
  - Measures concentrated on social programs (unemployment benefits, retraining, child allowances); taxes included selected excises and increased unemployment insurance rate.
  - Recording convention: tax hikes recorded as 0.56 percent in 1982 and –0.41 percent in 1984 due to temporariness.
- Germany 1983:
  - Fiscal consolidation totaled 0.87 percent of GDP.
  - Spending cuts: 0.57 percent of GDP (DM 10.8 billion).
  - Tax hikes: 0.30 percent of GDP (DM 5.8 billion).
  - Measures: spending cuts on child allowance, pensions, public employee salaries; tax hikes in VAT rate and social security/unemployment insurance contributions.
- Germany 1984:
  - Fiscal consolidation totaled 0.18 percent of GDP.
  - Spending cuts: 0.59 percent of GDP (DM 11.8 billion).
  - Expiration in 1984 of temporary tax hikes introduced in 1982 had a budgetary impact of –0.41 percent of GDP in 1984.
  - Net consolidation: 0.59–0.41 = 0.18 percent of GDP.
- Germany 1991:
  - Fiscal consolidation amounted to 1.11 percent of GDP.
  - Tax hikes: 1.08 percent of GDP (DM 32.2 billion in 1991).
  - Spending cuts: 0.03 percent of GDP (DM 1 billion in 1991).
  - Measures motivated by need to reduce a large budget deficit and meet medium-term targets; two major tax-hike packages announced January and February 1991.
  - Some tax hikes temporary; expiration in 1993 had budgetary impact of –DM 15.1 billion (–0.46 percent of GDP) in 1993.
  - Subsidy cuts cumulative impact rising from DM 1 billion (0.03 percent of GDP) in 1991 to DM 19.5 billion (0.56 percent of GDP) by 1994.
- Germany 1992:
  - Fiscal consolidation amounted to 0.46 percent of GDP.
  - Tax hikes: 0.27 percent of GDP (carryover from 1991 measures).
  - Spending cuts: 0.19 percent of GDP (subsidy cuts from 1991).
- Germany 1993:
  - Fiscal consolidation amounted to 0.11 percent of GDP.
  - Spending cuts: 0.18 percent of GDP (carryover from 1991).
  - Net tax change: –0.07 percent of GDP (VAT increase 0.39 percent of GDP offset by expiration of temporary 1991 tax hikes –0.46 percent of GDP).
- Germany 1994:
  - Fiscal consolidation amounted to 0.91 percent of GDP.
  - Spending cuts: 0.83 percent of GDP (0.65 + 0.18; DM 22.5 billion in 1994 from the 1993 package and earlier 1991 cuts).
  - Tax hikes: 0.08 percent of GDP.
  - Measures included reductions in replacement ratios for unemployment compensation and related benefits; tax-side measures focused on reducing exemptions, broadening tax base, combating evasion.
- Germany 1995:
  - Fiscal consolidation amounted to 1.08 percent of GDP.
  - Spending cuts: 0.84 percent of GDP (0.11 + 0.14).
  - Tax hikes: 0.24 percent of GDP (0.77 + 0.07, noting DM 28 billion in 1995 from the Solidarity Pact tax measures).
  - Measures included income tax surcharge of 7.5 percent and an increase in the wealth tax; spending cuts in defense, subsidies, federal employment, and civil-servant pay supplements.
- Germany 1997:
  - Fiscal consolidation totaled 1.60 percent of GDP.
  - Spending cuts: 1.10 percent of GDP (1.00 + 0.10).
  - Tax hikes: 0.50 percent of GDP.
  - Measures in late 1996/1997 heavily weighted on spending cuts to meet Maastricht deficit criteria; spending cuts focused on wage restraint, retrenchments, spending limits, reducing sick pay coverage, restricting spa visits, tightening eligibility for unemployment benefits; May 1997 temporary spending freeze worth 0.10 percent of GDP.
  - Tax-side: higher social security contribution rates yielding 0.50 percent of GDP.
- Germany 1998:
  - Expiration of the temporary spending freeze introduced in May 1997 had a budgetary impact of –0.10 percent of GDP in 1998.
  - No net fiscal consolidation on the tax side in 1998 (rise in VAT in April 1998 offset by fall in the solidarity surcharge).
- Germany 1999:
  - Fiscal consolidation totaled 0.30 percent of GDP based on tax hikes.
  - A VAT rate hike by one percentage point in April 1998 had full-year impact in 1999; combined with recovery of the income tax base due to phasing out of previous allowances, yielding 0.30 percent of GDP in 1999.
- Germany 2000:
  - Fiscal consolidation amounted to 0.70 percent of GDP.
  - Spending cuts: 0.75 percent of GDP.
  - Tax cuts: 0.05 percent of GDP (partly offsetting spending cuts).
  - Measures motivated by the Germany Fiscal Stability Program submitted to the EU Council of Ministers and the European Commission in January (text ends at this point).

*Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2011/_wp11128.pdf*

### 1999. As the 1999 IMF Staff Report – Selected Issues (p. 44) reports, “The June 1999 fiscal

### _wp11128 - 1999. As the 1999 IMF Staff Report – Selected Issues (p. 44) reports, “The June 1999 fiscal

### Overview: 1999 fiscal package and context
- The June 1999 fiscal package “distinguishes itself from earlier consolidation efforts, in that it encompasses tax reductions rather than tax increases, and achieves consolidation through targeted spending cuts rather than savings across the board.”
- Other tax changes in 1997 were broadly revenue neutral: the wealth tax was abolished, the inheritance and gift taxes were modified, and the real estate transactions tax was increased.

### Germany: 2000–2007 consolidation episodes
- Germany 2000
  - Spending cuts: DM 30.1 billion, or 0.75 percent of GDP.
  - Tax reform budgetary impact: DM –2 billion in 2000 (OECD Economic Surveys 1998-1999, p. 58), or about –0.05 percent of GDP in 2000.
  - Net fiscal consolidation in 2000: 0.70 percent of GDP (0.75–0.05), with 0.75 percent of GDP in spending cuts and 0.05 percent of GDP in tax cuts.
  - Tax reform implemented over 2000-2002 focused on reducing tax rates on personal income, business income, and retained profits.

- Germany 2003
  - Fiscal consolidation totaled 0.74 percent of GDP based on tax hikes.
  - Motivation: reduce a large inherited budget deficit and comply with the Stability and Growth Pact (general government budget deficit of 3.7 percent in 2002).
  - Package largely consisted of measures generating higher revenues in income, business and indirect taxes, estimated budgetary impact: € 16 billion, or 0.74 percent of GDP.

- Germany 2004
  - Fiscal consolidation totaled 0.40 percent of GDP.
  - Spending cuts: 1.10 percent of GDP in 2004 (2004 IMF Staff Report, p. 23), with more than half falling on social transfers and subsidies.
  - Tax cuts: 0.70 percent of GDP in 2004 associated with the latest stage of the tax reform initiated in 2000.
  - Net consolidation: spending cuts more than offset tax cuts.

- Germany 2006
  - Fiscal consolidation totaled 0.50 percent of GDP based on spending cuts (2006 IMF Staff Report, p. 23).
  - Motivation: deficit reduction and steps toward sustainability (Germany Stability Program 2007, p. 20).

- Germany 2007
  - Fiscal consolidation totaled 0.90 percent of GDP.
  - Spending cuts: 0.40 percent of GDP.
  - Tax hikes: 0.50 percent of GDP (net budgetary impact, p. 16).
  - Notable tax change: VAT rate hike from 16 to 19 percent partly offset by a cut in social security contributions.

- Notes relevant to Germany
  - 2001-2002: tax cuts phased in over 2001-2002 motivated by long-run (supply-side) considerations; these years are not recorded as fiscal consolidation.
  - 2005: spending cuts estimated at 0.10 percent of GDP (2005 IMF Staff Report, p. 27) were insufficient to offset tax cuts from the tax reform; thus no fiscal consolidation recorded in 2005.
  - 2008: corporate income tax reform and reduction in unemployment contributions resulted in no net fiscal consolidation (2008 IMF Staff Report, p.24).

### Ireland: selected consolidation episodes (1982–2009)
- Ireland 1982
  - Fiscal consolidation totaled 2.80 percent of GDP.
  - Tax hikes: Ir£ 371.4 million, or 2.54 percent of GDP (primarily indirect tax hikes such as higher VAT rates).
  - Spending cuts: Ir£ 25 million (embargo on filling vacancies, 0.09 percent of GDP) plus savings from abolition/reduction of food subsidies (Ir£ 13.2 billion in 1983, 0.17 percent of GDP) → total spending cuts 0.26 percent of GDP.
  - Motivation: eliminate the current budget deficit by 1987.

- Ireland 1983
  - Fiscal consolidation totaled 2.50 percent of GDP.
  - Tax hikes: Ir£ 395.4 million, or 2.44 percent of GDP (mostly higher indirect tax rates: VAT, excises, fuel tax).
  - Spending cuts: Ir£ 10 million (embargo on filling vacancies continued), or 0.06 percent of GDP.
  - Motivation: reduce current budget deficit to 6¾ per cent of GNP and contain EBR to 13 per cent of GNP.

- Ireland 1984
  - Fiscal consolidation totaled 0.29 percent of GDP based on tax hikes.
  - Revenue measures: Ir£ 66.5 million, with tax hikes of Ir£ 51.5 million (0.29 percent of GDP), mainly higher indirect tax rates and tax buoyancy.
  - Policy stance: moderate pace of fiscal adjustment to avoid a significant deflationary impulse.

- Ireland 1985
  - Fiscal consolidation totaled 0.12 percent of GDP based on tax hikes.
  - Revenue measures: Ir£ 82 million, with tax hikes of Ir£ 24 million (0.12 percent of GDP).

- Ireland 1986
  - Fiscal consolidation totaled 0.74 percent of GDP based on tax hikes.
  - Tax hikes: Ir£ 154.1 million (0.74 percent of GDP), mainly from increases in rates of indirect taxes such as VAT and excises.

- Ireland 1987
  - Fiscal consolidation totaled 1.65 percent of GDP.
  - Spending cuts: Ir£ 253 million, or 1.12 percent of GDP (non-interest spending cuts; freeze in public-sector wages and limits on hiring).
  - Tax hikes: Ir£ 117 million, or 0.53 percent of GDP.
  - Motivation: strengthen public finances; medium-term objective to reduce Exchequer Borrowing Requirement to 5-7 percent of GNP by 1990.

- Ireland 1988
  - Fiscal consolidation totaled 1.95 percent of GDP based on spending cuts.
  - Spending cuts: Ir£ 471 million (1.95 percent of GDP), of which Ir£ 203 million corresponded to cuts in capital spending.
  - Outcome: EBR fell to 3.3 percent of GNP (1990 IMF Recent Economic Developments, p. 21).

- Ireland 2009
  - Fiscal consolidation totaled 4.74 percent of GDP.
  - Spending measures: 2.39 percent of GDP.
  - Tax hikes: 2.35 percent of GDP.
  - Chronology and composition of spending cuts:
    - July 2008: estimated budgetary impact of € 440 million in 2008 and € 1 billion in 2009 (October 2008 Ireland Stability Program, p. D5). Change in saving in 2009 due to these cuts: € 560 billion (1000–440), or 0.35 percent of GDP (as reported in source).
    - February 2009: spending cuts focused on reducing the public-sector wage bill generated additional savings of € 1.8 billion (1.13 percent of GDP) in 2009 (p. 36).
    - April 2009 Supplementary Budget: further spending cuts of € 1.46 billion (0.92 percent of GDP), of which €576 fell on capital spending (p. 36).
  - Motivation: reduce budget deficit, address structural fiscal imbalance, and bring general government deficit below 3 percent of GDP by 2014 (Ireland Stability Program, submitted 9 December 2009, p.32).

### Cross-cutting observations on fiscal consolidation measures
- Consolidation can be driven by either spending cuts, tax hikes, or a combination; several episodes combine both instruments with precise budgetary impacts reported in currency and percent-of-GDP terms.
- Supply-side motivated tax reforms (e.g., Germany 2000 tax reform implemented over 2000-2002) sometimes entail near-term negative budgetary impacts that are subtracted when assessing net fiscal consolidation.
- Compliance with EU fiscal rules (Stability and Growth Pact) is an explicit motivation cited in multiple German consolidation episodes (2003–2004).
- In Ireland, consolidation episodes during the 1980s were often motivated by medium-term deficit reduction targets and relied heavily on indirect tax increases and spending restraints (embargoes on filling vacancies, welfare and subsidy cuts, capital spending reductions).

*Italic: Source content as provided from the IMF working paper excerpt.*

### 2.39 percent of GDP in 2009 (0.35+1.13+0.92). On the revenue side, the 2009 Budget of

### _wp11128 - 2.39 percent of GDP in 2009 (0.35+1.13+0.92). On the revenue side, the 2009 Budget of

### 2009 fiscal measures and consolidation (summary)
- Total fiscal consolidation in 2009 amounted to 4.74 percent of GDP (2.39+2.35).
- On the spending side, consolidation contributed 2.39 percent of GDP in 2009 (0.35+1.13+0.92).
- On the revenue side:
  - The October 2008 Budget introduced tax hikes with a budgetary impact of € 1.95 billion (1.22 percent of GDP) in 2009, a substantial element of which was the introduction of an income levy.
  - The 2009 Supplementary Budget of April 2009 introduced further tax hikes worth € 1.8 billion in 2009, or 1.13 percent of GDP, with the main measures being an increase in the income levy and changes to social security and health levy arrangements.
  - Tax hikes in 2009 thus amounted to 2.35 percent of GDP (1.22+1.13).

### Italy — chronicle of fiscal consolidation episodes (selected years and magnitudes)
- Italy 1991
  - Fiscal consolidation amounted to 2.77 percent of GDP, with tax hikes worth 1.69 percent of GDP and spending cuts of 1.08 percent of GDP.
  - Budgetary measures increased tax and social security receipts by 25 trillion lire and reduced expenditure by 16 trillion lire.
  - Fiscal consolidation amounted to Lit 41 trillion (2.77 percent of GDP), with 1.69 percent of GDP in tax hikes and 1.08 percent of GDP in spending cuts.
  - One-off tax measures introduced in 1991 amounted to Lit 19.4 trillion and are recorded as having a budgetary impact of –Lit 19.4 trillion in the following year.

- Italy 1992
  - Fiscal consolidation totaled 3.50 percent of GDP, with spending cuts of 1.90 percent of GDP and tax hikes of 1.60 percent of GDP.
  - The 1992 Budget introduced tax hikes of Lit 21.5 trillion (1.4 percent of GDP) and primary spending cuts of Lit 20.8 trillion (1.38 percent of GDP).
  - The July Emergency Budget added tax increases worth Lit 21.8 trillion (1.45 percent of GDP) and spending cuts worth Lit 8.2 trillion (0.54 percent of GDP).
  - Net tax hikes amounted to Lit 23.9 trillion (21.5+21.8–19.4), or 1.60 percent of GDP; spending cuts amounted to Lit 29 trillion (1.90 percent of GDP).
  - Total fiscal consolidation measures in 1992 amounted to Lit 52.9 trillion (21.5+20.8+21.8+8.2–19.4), or 3.50 percent of GDP.

- Italy 1993
  - Fiscal consolidation totaled 4.49 percent of GDP, with spending cuts of 2.49 percent of GDP and tax hikes of 2.00 percent of GDP.
  - First-round spending cuts: Lit 31 trillion (2.09 percent of GDP) targeting pensions, health services, local authority finance, and public employment.
  - First-round tax measures: Lit 42.5 trillion (2.80 percent of GDP), including revision of personal income tax brackets and a new municipal tax on buildings.
  - Second-round measures in May: Lit 12.4 trillion (0.80 percent of GDP), evenly split between revenue measures and spending cuts.
  - Expiration in 1993 of one-off tax measures worth 1.20 percent of GDP reduced net consolidation: gross 5.69 percent of GDP less 1.20 percent = 4.49 percent of GDP. Net spending cuts 2.49 percent; net revenue measures 2.00 percent (2.80+0.40–1.20).

- Italy 1994
  - Fiscal consolidation totaled 1.43 percent of GDP, with spending cuts of 1.70 percent of GDP partly offset by tax reductions of 0.27 percent of GDP.
  - Spending measures: Lit 26.3 trillion (1.70 percent of GDP), primarily lower transfers and some public investment cuts.
  - Revenue measures: Lit 5 trillion (0.30 percent of GDP), mainly reduced tax expenditure and higher indirect taxes.
  - Expiration of one-off measures had an estimated impact of Lit 9 trillion, or 0.57 percent of GDP, producing net tax impact of –0.27 percent of GDP.

- Italy 1995
  - Fiscal consolidation totaled 4.20 percent of GDP, with spending cuts of 1.79 percent of GDP and tax hikes of 2.41 percent of GDP.
  - First round: spending cuts Lit 24.1 trillion and tax increases Lit 23.9 trillion (1.47 percent and 1.46 percent of GDP respectively).
  - Second round (February 1995): tax hikes Lit 15.6 trillion (0.95 percent of GDP) and non-interest spending cuts Lit 5.2 trillion (0.32 percent of GDP).
  - One-off revenue measures in 1995 estimated at Lit 11.5 trillion (0.70 percent of GDP); total one-off tax measures in 1995 amounted to 2.16 percent of GDP and had a budgetary impact of –2.16 percent of GDP in 1996.

- Italy 1996
  - Fiscal consolidation totaled 0.34 percent of GDP, with spending cuts of 1.08 percent of GDP partly offset by tax reductions of 0.74 percent of GDP.
  - First round (1996 Budget): spending cuts Lit 10 trillion (0.52 percent of GDP) and tax measures Lit 22.5 trillion (1.16 percent of GDP), of which Lit 8 trillion (0.41 percent of GDP) were one-off.
  - Additional measures in June: Lit 16 trillion, primarily on spending; spending cuts Lit 11 trillion (0.57 percent of GDP); revenue measures Lit 5 trillion (0.26 percent of GDP).
  - Expiration in 1996 of 1995 one-off revenue measures (2.16 percent of GDP) had budgetary impact of –2.16 percent. Net tax impact in 1996: –0.74 percent of GDP (1.16+0.26–2.16). Total fiscal consolidation 0.34 percent (1.08–0.74).

- Italy 1997
  - Fiscal consolidation totaled 1.82 percent of GDP, with spending cuts of 0.93 percent of GDP and tax hikes of 0.89 percent of GDP.
  - Spending cuts: Lit 18.2 trillion (0.93 percent of GDP) across a wide range of current expenditure items.
  - Tax hikes: Lit 25.6 trillion (1.30 percent of GDP), including the one-year “Europa tax” of 0.60 percentage points of GDP; expiration of temporary tax measures introduced in 1996 had budgetary impact of –0.41 percent of GDP in 1997.
  - Net tax impact: 0.89 percent of GDP (1.30–0.41). Fiscal consolidation 1.82 percent (0.93 + 0.89).

- Italy 1998
  - Fiscal consolidation totaled 0.68 percent of GDP, with spending cuts of 0.67 percent and tax hikes of 0.01 percent of GDP.
  - Measures: spending cuts Lit 13 trillion (0.67 percent of GDP) and tax increases Lit 12 trillion (0.61 percent of GDP).
  - Expiration of the one-year Europa tax of 0.60 percent of GDP reduced net tax hikes to 0.01 percent (0.61–0.60). Total consolidation 0.68 percent (0.67+0.01).

- Italy 2004
  - Fiscal consolidation totaled 1.30 percent of GDP, with spending cuts of 0.63 percent of GDP and tax hikes of 0.67 percent of GDP.
  - 2004 Budget measures amounted to 16 billion Euros (about 0.70 percent of GDP): 9 billion (about 0.40 percent of GDP) in higher revenues and 7 billion (about 0.30 percent of GDP) in lower expenditure.
  - Additional July 2004 measures: €7.6 (0.60 percent of GDP), of which 0.33 percentage points were expenditure reductions.
  - Spending cuts 0.63 percent (0.30+0.33); tax hikes 0.67 percent (0.40+0.27); total 1.30 percent (0.63+0.67).

- Italy 2005
  - Fiscal consolidation totaled 1.00 percent of GDP, with spending cuts of 0.60 percent of GDP and tax hikes of 0.40 percent of GDP.
  - Measures: spending cuts of €8.7 billion (0.60 percent of GDP) and tax hikes of €5.2 billion (0.40 percent of GDP).
  - Financial operations (sales of buildings) reduced the budget deficit by an additional 0.60 percent of GDP but are not recorded as tax hikes or spending cuts in the analysis.

- Italy 2006
  - Fiscal consolidation amounted to 1.39 percent of GDP with spending cuts of 0.89 percent of GDP and tax hikes of 0.50 percent of GDP.
  - Consolidation measures totaled €27.9 billion: tax measures €11 billion and spending cuts €17 billion.
  - Offsetting measures: tax cuts €3.7 billion and spending increases €3.9 billion for social priorities.
  - For analysis purposes, net fiscal consolidation amounted to €20.4 billion (1.39 percent of GDP), with spending cuts €13.1 billion (17–3.9), or 0.89 percent of GDP, and tax hikes €7.3 billion (11–3.7), or 0.50 percent of GDP.

- Italy 2007
  - Fiscal consolidation amounted to 1.03 percent of GDP, with tax hikes of 1.32 percent of GDP partly offset by spending increases of 0.29 percent of GDP.
  - Consolidation measures motivated by deficit reduction amounted to €34.7 billion with spending cuts of €9.6 billion and tax policy measures of €25.1 billion.
  - Offsetting measures: tax cuts €5.5 billion and spending increases €14.0 billion.
  - For analysis, fiscal consolidation amounted to €24 billion (1.03 percent of GDP), with spending increases of €4.4 billion (14.0–9.6), or 0.29 percent of GDP more than offset by tax hikes of €19.6 billion (25.1–5.5), or 1.32 percent of GDP.

### Japan 1979 (brief allocation note)
- Fiscal consolidation in 1979 amounted to 0.115 due to tax hikes.
- June 1979 tax hikes (mainly on gasoline and aviation fuel) had budgetary impacts of ¥ 434 billion in FY1979/1980 and ¥ 627 billion in FY1980/1981.
- Change in saving due to the tax hikes: ¥ 434 billion in FY 1979/80 and ¥ 193 billion (627–434) in FY 1980/81.
- Allocation across calendar years in billions of yen: 253 in 1979 (7/12 × 434), 293 in 1980 (5/12 × 434 + 7/12 × 193) and 80 in 1981 (5/12 × 193).
- In percent of GDP, the allocation of the tax hikes across calendar years is: 0.115 in 1979.

*Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2011/_wp11128.pdf*

### 0.123 in 1980, and 0.031 in 1981. Fiscal consolidation in 1979 thus amounted to 0.115

### _wp11128 - 0.123 in 1980, and 0.031 in 1981. Fiscal consolidation in 1979 thus amounted to 0.115

### Japan 1980–1983: summary of consolidation measures and magnitudes
- 1980: Fiscal consolidation amounted to 0.213 percent of GDP based on tax hikes.
  - New tax hikes introduced in June 1980 worth ¥ 351 billion in FY 1980/1981.
  - Allocation across calendar years: ¥ 205 in 1980 (7/12 × 351) (0.09 percent of GDP) and ¥ 146 billion in 1981 (0.06 percent of GDP).
  - FY 1979/80 Budget introduced tax hikes of 0.123 percent of GDP in 1980.
  - Total 1980 consolidation: 0.213 percent of GDP (0.09 + 0.123).

- 1981: Fiscal consolidation totaled 0.434 percent of GDP based on tax hikes.
  - June 1981 Budget tax hikes estimated to provide ¥ 1.4 trillion.
  - Allocation across calendar years: ¥ 0.82 trillion in 1981 (7/12 × 1.4) (0.342 percent of GDP), and ¥ 0.58 trillion in 1982 (0.227 percent of GDP).
  - Tax hikes due to FY 1979/80 and FY 1980/81 Budgets amounted to 0.091 percent of GDP in 1981.
  - Total 1981 tax hikes: 0.434 percent of GDP (0.091 + 0.342, rounding).

- 1982: Fiscal consolidation totaled 0.71 percent of GDP, with spending cuts of 0.40 percent of GDP and tax measures of 0.31 percent of GDP.
  - Tax hikes in 1982: 0.227 percent of GDP (from FY 1981/82 Budget) + 0.085 percent of GDP (¥ 0.20 trillion in 1982 from June 1982 measures) = 0.312 percent of GDP (0.227 + 0.085).
  - Spending cuts for FY 1982/1983: “¥ 0.4 trillion was cut in personnel and administrative costs.”
    - Allocation: ¥ 0.23 trillion in 1982 (7/12 × 0.4) (0.098 percent of GDP), and ¥ 0.17 trillion in 1983 (0.065 percent of GDP).
  - Public works appropriations kept unchanged in nominal terms, implying a cut of about 0.30 percent of GNP.
  - Overall spending cuts in 1982: 0.39 percent of GDP (0.098 + 0.30).
  - Total consolidation in 1982: 0.71 percent of GDP (0.312 + 0.398).

- 1983: Fiscal consolidation totaled 0.422 percent of GDP, with spending cuts of 0.365 percent of GDP and tax hikes of 0.057 percent of GDP.
  - Spending cuts: personnel and administrative costs ¥ 0.167 trillion in 1983 (0.065 percent of GDP) + implied public works freeze cut of about 0.30 percent of GNP = 0.365 percent of GDP.
  - Tax hikes in 1983: ¥ 0.15 trillion (0.057 percent of GNP) due to FY 1982/83 Budget.
  - Total consolidation in 1983: 0.422 percent of GDP (0.365 + 0.057).

### Japan 1997–1998: fiscal structural reform and calendar-year allocations
- 1997: Fiscal consolidation totaled 1.425 percent of GDP, with spending cuts of 0.45 percent of GDP and tax hikes of 0.975 percent of GDP.
  - Measures included increase in consumption tax rate from 3 to 5 percent.
  - Budgetary impact in FY 1997: tax hikes of 1.30 percent of GDP and government investment cuts of 0.60 percent of GDP (total 1.90 percent of GDP in FY 1997).
  - Allocation across calendar years (percent of GDP): tax hikes 0.975 in 1997 and 0.325 in 1998; spending cuts 0.45 in 1997 and 0.15 in 1998.
  - Total consolidation in 1997: 1.425 percent of GDP (0.975 + 0.45).
  - Total consolidation in 1998 (carryover): 0.475 percent of GDP (0.325 + 0.15).

- 1998: Fiscal consolidation amounted to 0.475 percent of GDP with tax hikes of 0.325 percent of GDP and spending cuts of 0.15 percent of GDP.
  - These are the 1997 measures’ calendar-year impacts in 1998.

### Japan 2003–2007: multi-year program, public investment cuts, and tax/revenue measures
- Note on 1999–2002: Fiscal consolidation was suspended in late 1998 and did not resume until 2003.

- 2003: Fiscal consolidation totaled 0.48 percent of GDP based on spending cuts.
  - Multi-year plan announced in January 2002 targeted a primary budget surplus by the early 2010s and keeping general government expenditures at FY 2002 level of 38 percent of GDP.
  - FY 2003: supplementary budget added only 0.2 trillion yen of central government outlays, resulting in a 2.1 per cent decline in total expenditures compared to FY 2002.
  - Double-digit decline in public investment in real terms in FY 2003 on a general government basis.
  - Total public investment in 2003 estimated cut by 0.48 percent of GDP.

- 2004: Fiscal consolidation totaled 0.6375 percent of GDP, with a spending cut of 0.45 percent of GDP and tax hikes worth 0.1875 percent of GDP.
  - Revenue-side measures: pension premium hike for employees; partial abolition of special income tax deduction for spouses; end of elderly income tax deduction and scaling back of deductions on public pension benefits.
  - Total impact on revenue: 1.2 trillion yen (¼ per cent of GDP).
  - Allocation across calendar years: tax hike of 0.1875 percent of GDP in 2004 and 0.0625 percent of GDP in 2005.
  - Public investment cut reported as 0.45 percent of GDP.
  - Total consolidation in 2004: 0.6375 percent of GDP (0.1875 + 0.45).

- 2005: Fiscal consolidation totaled 0.2825 percent of GDP, with spending cuts of 0.22 percent of GDP and tax hikes of 0.0625 percent of GDP.
  - Budgetary impact in 2005: tax hikes from FY 2004 had impact of 0.0625 percent of GDP in 2005.
  - Public investment reduced by about 0.22 percent of GDP.
  - Net fiscal consolidation in 2005: 0.2825 percent of GDP (0.22 + 0.0625).

- 2006: Fiscal consolidation totaled 0.72 percent of GDP, with spending cuts of 0.27 percent of GDP and tax hikes of 0.45 percent of GDP.
  - Phasing out of fixed-rate cut in 2006–07 expected to expand revenue from personal income and local inhabitant taxes by 3.2 trillion yen (0.6% of GDP).
  - Calendar-year allocation of that tax hike: 0.45 percent of GDP in 2006 (¾ × 0.6) and 0.15 percent of GDP in 2007.
  - Public investment cut indicated as about 0.27 percent of GDP.
  - Total consolidation in 2006: 0.72 percent of GDP (0.45 + 0.27).

- 2007: Fiscal consolidation totaled 0.15 percent of GDP based on tax hikes.
  - Tax hikes introduced in FY 2006 had a budgetary impact in 2007 of 0.15 percent of GDP.

- Note on 2008–09: Following the onset of the global financial crisis, measures of the medium-term strategy were not fully implemented.

### Netherlands 1981–1982: initial entries (1981 detailed)
- Netherlands 1981: Fiscal consolidation totaled 1.75 percent of GDP, with tax hikes of 0.53 percent of GDP and spending cuts of 1.22 percent of GDP.
  - 1981 Budget introduced spending cuts of f3.6 billion (0.96 percent of GDP), with f2 billion corresponding to cuts in salaries and social transfers.
  - Budget raised the VAT rate and raised income tax scales, yielding additional savings of f0.5 billion (0.13 percent of GDP).
  - March 1981 additional measures: spending cuts f1 billion (0.27 percent of GDP) and tax increases f1.5 billion (0.40 percent of GDP).
  - Total 1981 consolidation: 1.75 percent of GDP = spending cuts 1.22 percent of GDP (0.96 + 0.27, rounding) + tax hikes 0.53 percent of GDP (0.13 + 0.40).

- Netherlands 1982: Fiscal consolidation totaled 1.71 percent of GDP based on spending cuts.
  - (Entry begins; further details continue in the source.)

*Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2011/_wp11128.pdf*

### preface to the 1982 Budget Memorandum (p. 3 and p.7): “There is a general recognition of

### _wp11128 - preface to the 1982 Budget Memorandum (p. 3 and p.7): “There is a general recognition of

### Major theme: Rationale for fiscal consolidation
- General recognition of the need to reduce the government’s budget deficit and stabilize the burden of social charges (preface to the 1982 Budget Memorandum, p. 3 and p.7).
- Stated reasons for substantial structural reduction in the financing deficit:
  - To contain pressure on interest rates on the money and capital markets and restore willingness to invest.
  - To apply a break to rapidly rising interest charges (preface to the 1982 Budget Memorandum).

### Netherlands — episodic fiscal consolidation (selected years and measures)
- 1982
  - Spending cuts introduced: f4.5 billion (1.15 percent of GDP) in the 1982 Budget Memorandum (p. 37).
  - Additional spending cuts in Spring Memorandum of June 1982: f2.2 billion (0.56 percent of GDP) (1983 IMF Recent Economic Developments, p. 33).
  - Total fiscal consolidation in 1982: 1.71 percent of GDP (1.15+0.56), based on spending cuts.
- 1983
  - Fiscal consolidation total: 3.24 percent of GDP (2.75 percent of GDP in spending cuts; 0.49 percent of GDP in tax hikes).
  - 1983 Budget package: f13.2 billion total, with spending cuts f10 billion and tax hikes f3.2 billion (1983 IMF Recent Economic Developments, pp. 34-35).
  - Subsequent government replaced f1.2 billion of planned tax hikes with additional spending cuts, so spending cuts became f11.2 billion (10+1.2) and tax hikes f2 billion (3.2–1.2).
  - Major spending-cut components: freeze on public-sector salaries and social security benefits (p. 34).
  - Tax hikes: higher social security contributions and indirect taxes (p. 35).
- 1984
  - Fiscal consolidation total: 1.76 percent of GDP based on spending cuts.
  - Spending cuts: f7,475 million (1.76 percent of GDP), mainly on social benefits and civil servants’ wages (1984 IMF Recent Economic Developments, p. 30).
  - Tax side: cuts in corporate profit taxes and social security contributions; offset by higher direct and indirect taxes (p. 29).
- 1985
  - Fiscal consolidation total: 1.24 percent of GDP based on spending cuts.
  - 1985 Budget introduced spending cuts of f9.3 billion (1985 IMF Recent Economic Developments, p. 34).
  - Cuts later discarded or delayed: f3.8 billion (1986 IMF Recent Economic Developments, p. 33), including f1.1 billion of public health spending delayed to 1986.
  - Net 1985 spending cuts: f5.5 billion (9.3–3.8, rounding), or 1.24 percent of GDP.
- 1986
  - Fiscal consolidation total: 1.74 percent of GDP based on spending cuts.
  - Policy-induced spending cuts: f8 billion (1.74 percent of GDP), with more than half affecting public-sector wage bill and social benefits (1986 IMF Recent Economic Developments, p. 34).
  - Social benefit cuts: nonindexation of social security benefits and child allowances; reduction in sickness insurance benefit rate to 70 percent of the last earned income.
- 1987
  - Fiscal consolidation total: 1.48 percent of GDP based on tax measures.
  - 1987 Budget proposed spending cuts f5.4 billion and tax hikes f5.4 billion (1988 IMF Recent Economic Developments p. 26).
  - Spending cuts fully offset by expenditure overruns later in the year (p. 27).
  - Tax hikes implemented via raising VAT rates and excises on oil products; eliminating tax reductions for stocks and reducing tax reductions for capital assets (p. 27).
  - Improvements in tax administration estimated to have a one-time budgetary impact of f1.4 billion in 1987 (p. 27), with a one-time reversal of –f1.4 billion in 1988.
  - Fiscal consolidation in 1987: f6.8 billion in revenue measures (5.4+1.4), or 1.48 percent of GDP.
- 1988
  - Fiscal consolidation total: 0.06 percent of GDP (spending cuts 0.75 percent of GDP; tax reductions –0.69 percent of GDP).
  - Spending cuts in 1988: total planned f7 billion (policy + 1988 Budget), partly offset by spending overruns f3.4 billion, yielding net cuts f3.6 billion (7–3.4), or 0.75 percent of GDP (1988/1989 IMF Recent Economic Developments).
  - Tax side: income tax rate reductions with 1988 budgetary impact f1.9 billion; combined with one-off 1987 tax measures impact –f1.4 billion in 1988, total tax impact –f3.3 billion (–1.9–1.4), or –0.69 percent of GDP.
  - Net fiscal consolidation: f0.3 billion (3.6–3.3), or 0.06 percent of GDP.
- 1991
  - Fiscal consolidation total: 0.87 percent of GDP based on tax measures.
  - Measures: advancement of tax payments with a one-time budgetary impact of 1.1 percent of net national income (NNI), or 0.87 percent of GDP (1993 IMF Recent Economic Developments, p. 8).
  - One-time nature implies a budgetary impact of –0.87 percent of GDP in 1992.
- 1992
  - Fiscal consolidation total: 0.74 percent of GDP (spending cuts 1.32 percent of GDP partly offset by tax reduction 0.58 percent of GDP).
  - 1991 Mid-term Review spending cuts budgetary impact in 1992: f4.85 billion (0.82 percent of GDP) (OECD Economic Survey 1992/93, p. 42).
  - Summer 1992 additional spending cuts: 0.50 percent of NNI, or 0.40 percent of GDP, half (0.20 percent of GDP) one-off (p. 44 and p. 88).
  - Spending cuts total: 1.22 percent of GDP (0.82+0.40).
  - Tax measures: f1.7 billion, or 0.29 percent of GDP; expiration of 1991 one-time tax measure: –0.87 percent of GDP. Net tax change: –0.58 percent of GDP (0.29–0.87).
  - Overall consolidation: 0.74 percent of GDP (1.32–0.58).
- 1993
  - Fiscal consolidation total: 0.12 percent of GDP (spending cuts 0.28 percent of GDP; tax measures budgetary cost –0.16 percent of GDP).
  - 1993 Budget (September 1992) spending cuts: 1.00 percent of NNI, or 0.78 percent of GDP; tax cuts: 0.50 percent of NNI, or 0.39 percent of GDP (1993 IMF Recent Economic Developments, p. 14).
  - Subsequent packages: total savings 0.80 percent of GDP (sales of government property 0.50 percent of GDP and spending cuts 0.30 percent of GDP) (OECD Economic Surveys 1993/94, p. 38).
  - Additional tax measures in 1992–1993: net cumulative budgetary impact f2.8 billion in 1993, with f2.6 billion (0.43 percent of GDP) occurring in 1993 (OECD Economic Survey 1992/93, p. 43).
  - One-off spending measures from summer 1992 had negative budgetary impact in 1993 of –0.20 percent of GDP.
  - Spending cuts in 1993: 0.28 percent of GDP (0.78+0.30–0.20).
  - Tax measures net impact in 1993: –0.16 percent of GDP (–0.39+0.43–0.20).
- 2004
  - Fiscal consolidation total: 1.70 percent of GDP (spending cuts 1.30 percent of GDP; tax hikes 0.40 percent of GDP).
  - Motivated by deficit reduction and compliance with the Maastricht 3 percent ceiling (2004 IMF Staff Report, p. 8).
  - Four rounds of packages in 2004:
    - First three rounds (including “Strategic Accord” and “Global Agreement”): 1.3 percent of GDP (spending cuts 1.0 percent of GDP; tax hikes 0.3 percent of GDP) (Netherlands Stability Program Update of February 2004, p. 11).
    - Additional Spring Budget measures: 0.40 percent of GDP (spending cuts 0.30 percent of GDP; tax hikes 0.10 percent of GDP) (Netherlands Stability Program Update of November 2004, p. 14).
  - Totals: spending cuts 1.30 percent of GDP (1.0+0.30); tax hikes 0.40 percent of GDP (0.30+0.10).
- 2005
  - Fiscal consolidation total: 0.50 percent of GDP (spending cuts 0.30 percent of GDP; tax measures 0.20 percent of GDP).
  - Motivation: reduce general government deficit below 3 percent of GDP (Netherlands Stability Program of January 2005, p. 3).
  - 2005 Budget: net spending cuts 0.30 percent of GDP and net tax increases 0.20 percent of GDP (Netherlands Stability Program of January 2005, p. 12).
  - Spending-cut targets: civil servant wage bill, public health insurance, subsidies on employing low-paid workers; reducing access to unemployment benefits.
  - Tax hikes: raising two lowest income tax brackets, higher disability premiums, increases in premiums for public health insurance, ending credits for buying personal computers for home use.

### Portugal — selected consolidation episodes and measures
- 1983
  - Fiscal consolidation total: 2.30 percent of GDP (spending cuts 0.95 percent of GDP; tax hikes 1.35 percent of GDP).
  - Cuts to current spending: 11.7 billion escudos (about 0.63 percent of GDP).
  - Cuts to expenditure on goods and services: 6 billion escudos (0.32 percent of GDP).
  - Tax hikes: 25 billion escudos, or 1.35 percent of GDP (1983/1984 OECD Economic Surveys).
- 2000
  - Fiscal consolidation total: 0.50 percent of GDP based on spending cuts.
  - Measures: intra-year budget freeze with estimated budgetary impact 0.50 per cent of GDP (2001 OECD Economic Surveys, p. 51).
  - Elements: freeze on 15 percent of expenditures for acquisition of goods and services (including capital goods); freeze on 10 percent of current transfers to non-State parts of general government; reserve clause covering 8 percent of expenditures for public investment; restrictions on hiring of civil servants.
- 2002
  - Fiscal consolidation total: 1.60 percent of GDP (spending cuts 0.40 percent of GDP; tax measures 1.20 percent of GDP).
  - Motivation: reduce fiscal deficit to 2.8 percent of GDP and to comply with SGP’s 3 percent ceiling (2002 IMF Staff Report, p. 14).
  - June Supplementary Budget deficit-reduction measures: estimated budgetary impact 0.60 percent of GDP (European Commission 2002 Update of Convergence Program of Portugal, p. 3).
  - One-off measures in late 2002: budgetary impact 1.50 percent of GDP (Banco de Portugal Annual Report 2002, p. 97).
  - Of total 2.10 percent (0.60+1.50), 0.50 percent of GDP reflected financial transactions (asset sales) and are not counted as tax or spending measures, yielding fiscal consolidation 1.60 percent of GDP (0.60+1.50–0.50).
  - Tax-side: one-off tax amnesty estimated budgetary impact 0.90 percent of GDP; standard VAT rate increase from 17 to 19 percent yielded about 0.30 percent of GDP; total tax measures 1.20 percent of GDP (0.90+0.30).

### Observations on policy instruments and composition
- Spending-side measures frequently included:
  - Freezes on public-sector salaries and government wage bills.
  - Cuts to social benefits and nonindexation of social security benefits and child allowances.
  - Reductions in public health spending and sickness insurance benefit rates (e.g., 70 percent of last earned income).
  - Targeted cuts to ministries (education and science, housing, physical planning and environment) and investment subsidy schemes (WIR).
- Revenue-side measures included:
  - Tax hikes via higher social security contributions, indirect taxes, VAT rate increases, and elimination or reduction of tax reliefs.
  - One-off revenue measures such as tax amnesties and tax administration improvements (one-time f1.4 billion in 1987 Netherlands).
  - Some long-run-motivated tax cuts (e.g., income tax rate reductions) that reduced measured fiscal consolidation in the short run.
- One-off measures and asset sales:
  - One-off measures often produced temporary positive impacts followed by offsetting impacts in subsequent years (e.g., 1991 one-time tax measure: +0.87 percent of GDP in 1991 and –0.87 percent of GDP in 1992).
  - Financial transactions and asset sales are treated separately and not recorded as tax hikes or spending cuts in the database (e.g., Portugal 2002: 0.50 percent of GDP in asset sales excluded).

*Source: _wp11128 - preface to the 1982 Budget Memorandum (p. 3 and p.7) and extracted IMF/ OECD passages provided in the content unit.*

### 2003. The 2002 one-time tax amnesty yielded tax revenue of 0.15 percent of GDP in 2003

### _wp11128 - 2003. The 2002 one-time tax amnesty yielded tax revenue of 0.15 percent of GDP in 2003

### Portugal — 2003
- The 2002 one-time tax amnesty yielded tax revenue of 0.15 percent of GDP in 2003 after yielding 0.90 percent of GDP in 2002 (Banco de Portugal Annual Report 2004, p. 102).
- The change in saving due to the 2002 tax measure in 2003 was –0.75 percent of GDP (0.15–0.90).
- One-off financial transactions in 2003 (asset sales and transfer of pension funds to general government) amounted to 2.3 percent of GDP (2003 IMF Staff Report, p. 12). These are recorded in the narrative but are not entered as tax hikes or spending cuts in the database.
- Net of these financial transactions, fiscal consolidation in 2003 was limited.
  - Some wage bill reduction occurred, but net budgetary impact was limited: “Public employment was estimated to have declined during 2003, mostly due to regular and early retirement. Given the relatively generous retirement benefits for most of these civil servants, their retirement initially entails no budgetary savings” (2003 IMF Staff Report, p. 12).

### Portugal — 2005
- Fiscal consolidation totaled 0.60 percent of GDP.
  - Tax hikes: 0.52 percent of GDP (budgetary impact of €810 million).
  - Spending cuts: 0.08 percent of GDP (budgetary impact of €125 million).
- Motivation: deficit reduction; authorities intended to reduce the deficit to 6.0 percent of GDP in 2005 (2005 IMF Staff Report, p. 13).
- Main sources:
  - Most tax savings from a VAT rate hike.
  - Spending cuts mostly from restructuring public administration, human resources and public services (Portuguese Republic Stability and Growth Program 2005-2009 Table 2.4.1, p. 30).

### Portugal — 2006
- Fiscal consolidation totaled 1.65 percent of GDP.
  - Tax measures: 1.10 percent of GDP.
  - Spending cuts: 0.55 percent of GDP.
- Motivation: deficit reduction and sustainability of public finances as a pre-requisite for sustained economic growth (Portuguese Republic Stability and Growth Program 2005-2009, p. 1).
- Quantification (Table 2.4.1, p. 30):
  - Cumulative tax savings since 2005: €2,405 million.
  - Change in saving in 2006 relative to 2005: €1,595 million (2,405–810), or 1.10 percent of GDP.
  - Cumulative spending cuts in 2006: €915 million.
  - Change in spending saving relative to 2005: €790 million (915–125), or 0.55 percent of GDP.
- Spending cuts targeted public administration, social security benefits, and curbing social security and health co-payment expenditure.

### Portugal — 2007
- Fiscal consolidation totaled 1.40 percent of GDP.
  - Tax measures: 0.50 percent of GDP.
  - Spending cuts: 0.90 percent of GDP.
- Motivation: continuation of authorities’ multiyear deficit reduction strategy.
- Tax: additional budgetary impact of 0.50 percent of GDP in 2007, including more efficient tax administration (OECD Economic Surveys 2008/9, p. 46).
- Spending: restructuring public administration and curbing social spending with budgetary impact of 0.90 percent of GDP (p. 46).

### Spain — 1983
- Fiscal consolidation totaled 1.90 percent of GDP via tax hikes.
  - Indirect tax rate hikes: 1.00 percent of GDP.
  - Higher direct tax measures (withholdings schedule, reduced exemptions, reduced evasion): 0.90 percent of GDP.
- Motivation: deficit reduction and stabilization of general government deficit (1984 IMF Recent Economic Developments, p. 35).

### Spain — 1984
- Fiscal consolidation totaled 1.12 percent of GDP.
  - Spending cuts: 0.75 percent of GDP (Ptas 200 billion).
  - Tax measures: 0.37 percent of GDP (Ptas 100 billion).
- Motivation: continue fiscal adjustment and contract overall deficit (1985 IMF Recent Economic Developments, p. 37).
- A package approved in June 1984 was worth about Ptas 300 billion (pp. 44-45).

### Spain — 1989
- Fiscal consolidation totaled 1.22 percent of GDP.
  - Tax measures: 0.98 percent of GDP (0.20 + 0.50 + 0.28).
    - VAT and excise increases: 0.20 percent of GDP.
    - Direct tax increases (income and property): 0.50 percent of GDP.
    - Mid-May temporary package (bringing forward corporate taxes): 0.28 percent of GDP (Ptas 135).
  - Spending measures: 0.24 percent of GDP (Ptas 115).
- Note: Some measures were temporary and produced negative budgetary impacts when they expired in 1990 (e.g., temporary tax bringing forward and postponed spending).

### Spain — 1990
- End of temporary measures introduced in 1989 produced a budgetary impact of –0.40 percent of GDP.
  - Tax side: –0.25 percent of GDP (Ptas –135 billion).
  - Spending side: –0.15 percent of GDP (Ptas –75 billion).

### Spain — 1992
- Fiscal consolidation totaled 0.70 percent of GDP.
  - Spending cuts: 0.40 percent of GDP (0.30 + 0.10).
  - Tax hikes: 0.30 percent of GDP.
- Measures included VAT and excise hikes, higher social security contributions (budgetary impact 0.60 percent of GDP), offset by personal income tax cuts from earlier reform; later additional tax hikes of 0.30 percent of GDP in July (OECD Economic Surveys 1992/1993, p. 43).

### Spain — 1993
- Fiscal consolidation totaled 1.10 percent of GDP.
  - Tax hikes: 0.80 percent of GDP.
  - Spending cuts: 0.30 percent of GDP.
- Motivation: deficit reduction and meeting Maastricht criteria (OECD Economic Surveys 1993, p. 41).
- Measures included personal tax measures and hikes in social security contributions (budgetary impacts reported on p. 43).

### Spain — 1994
- Fiscal consolidation totaled 1.60 percent of GDP, entirely from spending cuts.
  - Public investment accounted for 1.40 percentage points of the adjustment.
- Motivation: revised multi-year Convergence Plan to reach 3 percent Maastricht target by 1997 (1996 IMF Recent Economic Developments, p. 9).

### Spain — 1995
- Fiscal consolidation totaled 0.74 percent of GDP from spending cuts.
  - Across-the-board cut in discretionary spending: Ptas 150 billion (0.20 percent of GDP).
  - Freeze of Ptas 400 billion (0.54 percent of GDP) on infrastructure investment and military spending (OECD Economic Surveys 1995/1996, p. 139).

### Spain — 1996
- Fiscal consolidation totaled 1.30 percent of GDP.
  - Spending cuts: 1.10 percent of GDP.
  - Tax hikes: 0.20 percent of GDP (excise taxes on tobacco and alcohol) (1997/1998 OECD Economic Surveys, p. 47; p. 156).

### Spain — 1997
- Fiscal consolidation totaled 1.20 percent of GDP.
  - Spending cuts: 1.10 percent of GDP (0.50 + 0.20 + 0.10 + 0.30).
  - Tax measures: 0.10 percent of GDP (new tax on insurance policies).
- Measures: wage freeze in public sector, hiring restrictions, cuts in purchases, cuts in public investment, cuts in unemployment benefits, pensions and health care benefits (OECD Economic Surveys 1998, p. 48; 1997 IMF Recent Economic Developments, p. 10).

### Sweden — 1984
- Fiscal consolidation totaled 0.90 percent of GDP.
  - Spending cuts: 0.69 percent of GDP (SKr 5.8 billion).
  - Tax hikes: 0.21 percent of GDP (SKr 18.8 billion).
- Motivation: deficit reduction; deficit-curbing package totaled SKr 7.6 billion (OECD Economic Surveys 1984/1985, p. 69).

### Sweden — 1993 (partial reporting)
- Fiscal consolidation totaled 1.81 percent of GDP.
  - Spending cuts: 1.39 percent of GDP.
  - Tax hikes: 0.42 percent of GDP.
- Measures introduced in mid-September 1992 and in January 1993 produced cumulative savings:
  - September package: SKr 7.6 billion in FY 1992/93 and SKr 14.2 billion in FY 1993/94 (cumulative SKr 21.8 billion).
  - Allocation to calendar years: spending cuts in 1993 totaled SKr 8.1 billion (4.2 + ½×7.8); tax hikes in 1993 totaled SKr 6.6 billion (3.4 + ½×6.4).
  - Additional January 1993 spending cuts: SKr 11.9 billion in FY 1993/94, allocated evenly across 1993 and 1994 (SKr 6.0 billion each).
  - January 1992 Budget spending cuts had a budgetary impact of SKr 7.8 billion in 1993 (1991/1992 OECD Economic Surveys, p. 44).

*Content unit: _wp11128 - 2003. The 2002 one-time tax amnesty yielded tax revenue of 0.15 percent of GDP in 2003*

### 21.9 billion (8.1+6.0+7.8), or 1.39 percent of GDP, tax hikes amounted to SKr 6.6 billion

### _wp11128 - 21.9 billion (8.1+6.0+7.8), or 1.39 percent of GDP, tax hikes amounted to SKr 6.6 billion

### Sweden: multiyear fiscal consolidation (early-to-late 1990s)
- Aggregate measures (early 1990s):
  - Total: 21.9 billion (8.1+6.0+7.8), or 1.39 percent of GDP.
  - Tax hikes: SKr 6.6 billion (0.42 percent of GDP).
  - Fiscal consolidation: 1.81 percent of GDP (1.39+0.42).

- 1993 measures (introduced September 1992 and January 1993):
  - Budgetary impact: SKr 13.1 billion.
  - Spending measures: SKr 9.9 billion (0.59 percent of GDP).
  - Tax measures: SKr 3.2 billion (0.19 percent of GDP).

- 1994:
  - Spending cuts had a budgetary impact of SKr 9.9 billion (3.9+6.0).
  - Tax hikes had a budgetary impact of SKr 3.2 billion.

- 1994 (summary in calendar-year terms):
  - Fiscal consolidation: 0.78 percent of GDP.
  - Spending cuts: 0.59 percent of GDP.
  - Tax hikes: 0.19 percent of GDP.
  - Measures introduced in September 1992 and January 1993: SKr 13.1 billion (spending SKr 9.9 billion; taxes SKr 3.2 billion).

- Multiyear deficit-reduction plan (announced September 1994; published June 1995 in EU Convergence Program):
  - Commitment: eliminate the budget deficit by 1998.
  - Multiyear program’s fiscal consolidation measures (as reported): to 8 percent of GDP (1997 OECD Economic Surveys, p. 58).
  - Composition of adjustment: 60 percent spending side and 40 percent tax side (1995 OECD Economic Surveys, p. 31).
  - Principal spending categories affected: social transfers (lower pensions, lower social security replacement rates, reduced child allowances).
  - Principal tax increases: higher social security contributions, wealth tax hikes, capital income tax hikes, and other categories.

- Year-by-year magnitude (reported in 1997 OECD Economic Surveys, p. 58):
  - 1995: 3.50 percent of GDP.
  - 1996: 2.00 percent of GDP.
  - 1997: 1.50 percent of GDP.
  - 1998: 1.00 percent of GDP.
  - Composition across 1995–1998: spending 60 percent, taxes 40 percent of the adjustment.

- 1995 specific:
  - Fiscal consolidation: 3.50 percent of GDP.
  - Spending cuts: 2.10 percent of GDP.
  - Tax hikes: 1.40 percent of GDP.
  - One-off financial transaction (not classified as tax hike or spending cut): withdrawing funds in the Working Life Fund with budgetary impact SKr 3.0 billion in 1992/93.

- 1996:
  - Fiscal consolidation: 2.00 percent of GDP.
  - Spending cuts: 1.20 percent of GDP.
  - Tax hikes: 0.80 percent of GDP.

- 1997:
  - Fiscal consolidation: 1.50 percent of GDP.
  - Spending cuts: 0.90 percent of GDP.
  - Tax hikes: 0.60 percent of GDP.

- 1998:
  - Fiscal consolidation: 1.00 percent of GDP.
  - Spending cuts: 0.60 percent of GDP.
  - Tax hikes: 0.40 percent of GDP.

- Program outcomes:
  - Final fiscal outcome better than anticipated.
  - General government financial surplus estimated for 1998: 1.6 percent of GDP.
  - Government announced medium-term goal: general government fiscal surplus of 2 percent of GDP per year over the economic cycle.

### United Kingdom: selected fiscal consolidations (1979–1996)
- 1979 (measures from June 1979 Budget; FY convention applied):
  - Fiscal consolidation (calendar-year allocation for 1979): 0.27 percent of GDP.
  - Spending cuts: 0.72 percent of GDP (budgetary impact £1.4 billion in 1979).
  - Tax cuts: 0.45 percent of GDP (budgetary impact £0.9 billion in 1979).
  - FY 1979-80 measures: reduce PSBR by £1.7 billion; sales of state-owned assets £1 billion; spending cuts £1.9 billion; tax cuts associated revenue loss £3.5 billion; VAT and excise hikes £2.3 billion.

- 1980:
  - Fiscal consolidation: 0.08 percent of GDP.
  - Spending cuts: 0.21 percent of GDP.
  - Tax cuts: 0.13 percent of GDP.
  - Budgetary impact in 1980 of June 1979 Budget measures: £0.2 billion (0.08 percent of GDP), tax cuts £0.3 billion (0.13 percent of GDP), spending cuts £0.5 billion (0.21 percent of GDP).

- 1981 (FY 1981/82 measures emphasized large revenue-side consolidation):
  - Fiscal consolidation in calendar-year allocation: 1.58 percent of GDP in 1981 and 0.53 percent of GDP in 1982 (from FY 1981/82 measures).
  - For FY 1981/82 measures:
    - Total consolidation: about 2.11 percent of GDP (1.9+0.21).
    - Tax measures: ₤3.61 billion (1.9 percent of GDP) in 1981/82, comprising higher indirect taxes ₤2.4 billion (1.25 percent of GDP) and higher direct taxes ₤1.2 billion (0.63 percent of GDP).
    - Expenditure measures: cuts to public investment ₤0.4 billion (0.21 percent of GDP) in 1981/82.
  - Allocation across calendar years (convention applied):
    - Tax measures: 1.425 percent of GDP in 1981 and 0.475 percent of GDP in 1982.
    - Spending cuts: 0.1575 percent of GDP in 1981 and 0.0525 percent of GDP in 1982.

- 1982:
  - Fiscal consolidation: 0.53 percent of GDP.
  - Spending cuts: 0.053 percent of GDP.
  - Tax hikes: 0.475 percent of GDP.
  - Consolidation measures based on the 1981/82 Budget.

- 1994 (deficit-reduction motivation; November 1994 Budget):
  - Fiscal consolidation totaled 0.83 percent of GDP.
  - Spending cuts: 0.15 percent of GDP.
  - Tax hikes: 0.68 percent of GDP.
  - The 1994/95 measures estimated to have raised revenue by ₤6.3 billion, or 0.90 percent of GDP (1995 OECD Economic Surveys, p.31).
  - Discretionary spending (Control Total) cut by ₤1.3 billion, or 0.2 percent of GDP; Control Total spending in 1994-95 reported as ₤249.6 billion.
  - Allocation across calendar years:
    - Consolidation: 0.825 in 1994 and 0.275 in 1995.
    - Tax hikes: 0.675 in 1994 and 0.225 in 1995.
    - Spending cuts: 0.15 in 1994 and 0.05 in 1995.

- 1995:
  - Fiscal consolidation: 0.275 percent of GDP.
  - Spending cuts: 0.05 percent of GDP.
  - Tax hikes: 0.225 percent of GDP.
  - Consolidation based on measures introduced in the 1994/95 Budget.

- 1996:
  - Fiscal consolidation: 0.30 percent of GDP, based on spending cuts.
  - FY 1996-97 announced cuts to discretionary (Control Total) spending of ₤3.2 billion in 1996-97 (about 0.4 percent of GDP).
  - Spending cuts in FY 1995/96 reported about 0.4 percent of GDP; allocation of spending cuts across calendar years follows the document’s convention.

*Source: _wp11128 - 21.9 billion (8.1+6.0+7.8), or 1.39 percent of GDP, tax hikes amounted to SKr 6.6 billion (PDF).*

### 0.30 percent of GDP to 1996, and 0.10 to 1997.

### _wp11128 - 0.30 percent of GDP to 1996, and 0.10 to 1997.

### United Kingdom: Overview of 1996–1999 fiscal consolidation
- July 1997 Budget (New Labour) introduced a five-year fiscal consolidation plan aimed at reducing a large inherited budget deficit and projected a fiscal surplus by the early 2000s.
- Fiscal consolidation totals and composition:
  - 1997: Total 0.69 percent of GDP; Tax hikes 0.53 percent of GDP; Spending cuts 0.16 percent of GDP.
  - 1998: Total 0.31 percent of GDP; Tax hikes 0.30 percent of GDP; Spending cuts 0.01 percent of GDP.
  - 1999: Total 0.21 percent of GDP; Tax hikes 0.206 percent of GDP; Spending cuts 0.005 percent of GDP.
- July 1997 Budget tax measures generated savings of ₤6 billion in FY 1997/98 and ₤6.7 billion in FY 1998/99.
- Welfare to Work program spending increased by ₤0.2 billion in FY 1997/98 and ₤1.2 billion in FY 1998/99; the cost of this program is subtracted from the total size of fiscal consolidation in the authors’ accounting.
- November 1996 Budget measures:
  - Spending cuts yielding savings of ₤1.9 billion in 1997-98, ₤2.5 billion in 1998-99 and ₤2.7 billion in 1999-00.
  - Tax changes with overall impact on revenue of –₤0.2 billion in 1997-98, ₤0.6 billion in 1998-99 and –₤2.6 billion in 1999-00.
- Memorandum (calendar year basis) change in saving in percent of GDP from Table 2:
  - Total: 1997 = 0.69; 1998 = 0.31; 1999 = 0.21
  - Tax: 1997 = 0.53; 1998 = 0.30; 1999 = 0.21
  - Spend: 1997 = 0.16; 1998 = 0.01; 1999 = 0.01
- Selected allocation figures from Table 2 (₤ billion, various entries):
  - July 1997 Budget saving totals: 1997 = 5.8; 1998 = –0.3; 1999 = 0.0
  - July 1997 Budget tax: 1997 = 6.0; 1998 = 0.7; 1999 = 0.0
  - July 1997 Budget spend: 1997 = –0.2; 1998 = –1.0; 1999 = 0.0
  - November 1996 Budget saving totals: 1997 = 1.7; 1998 = 1.4; 1999 = 2.2
  - November 1996 Budget tax: 1997 = –0.2; 1998 = 0.8; 1999 = 2.0
  - November 1996 Budget spend: 1997 = 1.9; 1998 = 0.6; 1999 = 0.2

### United States: Selected fiscal consolidations (1978–1995)
- United States 1978:
  - Fiscal consolidation totaled 0.135 percent of GDP based on a tax hike with estimated budgetary impact $2.9 billion (0.135 percent of GDP).
  - Tax hike associated with the 1972 Changes to Social Security.
- United States 1980:
  - Fiscal consolidation totaled 0.062 percent of GDP based on a tax hike with estimated budgetary impact $1.7 billion (0.062 percent of GDP).
  - Tax increase associated with the Social Security Amendments of 1977.
- United States 1981:
  - Net fiscal consolidation amounted to $8.3 billion (17.2–8.9) or 0.23 percent of GDP after offsetting a $8.9 billion tax cut from ERTA-81; gross tax hike estimated at $17.2 billion (0.56 percent of GDP).
- United States 1985:
  - Fiscal consolidation totaled 0.21 percent of GDP based on tax hikes; estimated budgetary impact $8.8 billion (0.21 percent of GDP).
- United States 1986:
  - Fiscal consolidation totaled 0.096 percent of GDP based on tax hikes; estimated budgetary effect $4.2 billion (0.096 percent of GDP).
- United States 1988:
  - Fiscal consolidation totaled 0.85 percent of GDP: Tax hikes 0.39 percent of GDP; Spending cuts 0.46 percent of GDP.
  - Net tax hike computed as $19.1 billion (15.5+10.8–7.2) or 0.39 percent of GDP.
  - Spending reduction about $23.5 billion (0.46 percent of GDP) beginning in 1988.
- United States 1990:
  - Fiscal consolidation totaled 0.33 percent of GDP: Tax hikes 0.26 percent of GDP (0.18+0.08); Spending cut 0.07 percent of GDP.
- United States 1991:
  - Fiscal consolidation totaled 0.58 percent of GDP: Tax hike 0.29 percent of GDP; Spending cut 0.29 percent of GDP.
  - OBRA-90 (enacted November 5 1990) designed to reduce the Federal deficit by nearly one-half trillion dollars over the next 5 years (1991–1995 estimate as described in the Economic Report of the President).
  - CBO-implied changes in budgetary savings (percent of GDP) from OBRA-90:
    - Tax: 1990 = 0.08; 1991 = 0.29; 1992 = 0.24; 1993–1995 ≈ close to zero.
    - Spend: 1990 = 0.07; 1991 = 0.29; 1992 = 0.29; 1993 = 0.21; 1994 = 0.43; 1995 = 0.25.
    - Total: 1990 = 0.15; 1991 = 0.58; 1992 = 0.52; 1993 = 0.20; 1994 = 0.50; 1995 = 0.27.
- United States 1992:
  - Fiscal consolidation totaled 0.52 percent of GDP: Tax hikes 0.24 percent of GDP; Spending cuts 0.29 percent of GDP (measures initiated in 1991).
- United States 1993:
  - Fiscal consolidation totaled 0.32 percent of GDP: Tax hikes 0.08 percent of GDP; Spending cuts 0.23 percent of GDP.
  - OBRA-93 (enacted August 10, 1993) budgetary effects (percent of GDP):
    - Tax: 1993 = 0.10; 1994 = 0.34; 1995 = 0.17; 1996 = 0.08; 1997 = 0.06; 1998 = –0.02.
    - Spend: 1993 = 0.02; 1994 = 0.07; 1995 = 0.09; 1996 = 0.22; 1997 = 0.24; 1998 = 0.17.
    - Total: 1993 = 0.12; 1994 = 0.40; 1995 = 0.26; 1996 = 0.29; 1997 = 0.30; 1998 = 0.15.
  - Additional OBRA-90 motivated spending cuts in 1993 amounted to 0.21 percent of GDP; combined consolidation in 1993 recorded as 0.32 percent of GDP (0.12+0.21, rounding).
- United States 1994:
  - Fiscal consolidation totaled 0.90 percent of GDP: Spending cuts 0.50 percent of GDP; Tax measures 0.40 percent of GDP (results of OBRA-90 and OBRA-93).
- United States 1995:
  - Fiscal consolidation totaled 0.53 percent of GDP: Spending cuts 0.33 percent of GDP; Tax hikes 0.20 percent of GDP (ongoing multi-year adjustment from OBRA-90 and OBRA-93).

*Source: Authors’ calculations and budget documents reported in the PDF content unit.*

### 0.33 percent of GDP (0.09+0.25, rounding) and tax hikes of 0.20 percent of GDP

### _wp11128 - 0.33 percent of GDP (0.09+0.25, rounding) and tax hikes of 0.20 percent of GDP

### Summary findings on fiscal consolidation measures
- Overall headline figures reported: 0.33 percent of GDP (0.09+0.25, rounding) and tax hikes of 0.20 percent of GDP (0.17+0.03).
- The Appendix/Table A1 records budgetary impact of fiscal consolidation measures. Positive values indicate budgetary savings, negative values indicate budgetary costs.

### United States: year-by-year consolidation (selected years described)
- United States 1996
  - Fiscal consolidation in 1996 amounted to 0.29 percent of GDP, primarily on the spending side, as part of the ongoing multi-year adjustment.
  - Fiscal consolidation in 1996 was due to the measures contained in OBRA-93, which were motivated by deficit reduction.
  - Breakdown: spending cuts of 0.22 percent of GDP and tax hikes of 0.08 percent of GDP.
- United States 1997
  - Fiscal consolidation in 1997 amounted to 0.30 percent of GDP, primarily on the spending side, as part of the ongoing multi-year adjustment.
  - Fiscal consolidation in 1997 was due to the measures contained in OBRA-93, which were motivated by deficit reduction.
  - Breakdown: spending cuts of 0.24 percent of GDP and tax hikes of 0.06 percent of GDP.
- United States 1998
  - Fiscal consolidation in 1998 amounted to 0.15 percent of GDP based on spending cuts, as part of the ongoing multi-year adjustment.
  - Fiscal consolidation in 1998 was due to the measures contained in OBRA-93, which were motivated by deficit reduction.

### Note on 2000–2009 period for the United States
- No fiscal consolidation occurred during 2000-2009.
- The Balanced Budget Act of 1997 introduced spending cuts affecting this period, but associated budgetary savings were offset by the budgetary cost of the Tax Payer Relief Act of 1997 (CBO estimates referenced).
- Romer and Romer (2009, pp. 82-83) confirm that neither the Balanced Budget Act of 1997 nor the Tax Payer Relief Act of 1997 were primarily motivated by short term fluctuations.
- The Economic Growth and Tax Relief Reconciliation Act of 2001 introduced further tax cuts.
- Conclusion offered in the source: no net fiscal consolidation motivated by deficit reduction occurred during 2000-2009.

### Table A1: selected entries (Deficit-driven Fiscal Consolidation, Percent of GDP)
- Table note: Records budgetary impact of fiscal consolidation measures. Positive values indicate budgetary savings, negative values indicate budgetary costs.
- Selected country-year entries as reported in the table:
  - USA1978 0.14 0.14 0.00
  - USA1980 0.06 0.06 0.00
  - USA1981 0.23 0.23 0.00
  - USA1985 0.21 0.21 0.00
  - USA1986 0.10 0.10 0.00
  - USA1988 0.85 0.39 0.46
  - USA1990 0.33 0.26 0.07
  - USA1991 0.58 0.29 0.29
  - USA1992 0.52 0.24 0.28
  - USA1993 0.32 0.08 0.23
  - USA1994 0.90 0.40 0.50
  - USA1995 0.53 0.20 0.33
  - USA1996 0.29 0.08 0.22
  - USA1997 0.30 0.06 0.24
  - USA1998 0.15 0.00 0.15

### Analytical emphasis from source material
- The source attributes U.S. mid-1990s fiscal consolidation mainly to OBRA-93 measures and characterizes the consolidation as largely spending-based in the years 1996 and 1997.
- For 2000-2009, the source emphasizes legislative interactions (Balanced Budget Act of 1997, Tax Payer Relief Act of 1997, Economic Growth and Tax Relief Reconciliation Act of 2001) that produced no net deficit-driven consolidation when netted.

*Source: _wp11128 - 0.33 percent of GDP (0.09+0.25, rounding) and tax hikes of 0.20 percent of GDP.*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2011/_wp11128.pdf_