Governments and Promised Fiscal Consolidations: Do They Mean What They Say?
IMF Working Papers, February 23, 2017
Source details
- Canonical URL
- Governments and Promised Fiscal Consolidations: Do They Mean What They Say?
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Bibliographic details
- Authors: Sanjeev Gupta, João Tovar Jalles, Carlos Mulas-Granados, Michela Schena
- Published: February 23, 2017
- Series: IMF Working Papers
Summary and scope
- Paper analyzes causes and consequences of fiscal consolidation promise gaps, defined as the distance between planned fiscal adjustments and actual consolidations.
- Sample: 74 consolidation episodes derived from the narrative approach in 17 advanced economies during 1978 – 2015.
- Length and series identifiers:
- Pages: 37
- Volume: 2017
- Issue: 039
- Series: Working Paper No. 2017/039
- ISBN: 9781475581133
- ISSN: 1018-5941
Key empirical findings
- Magnitude of promise gaps:
- Promise gaps were sizeable: about 0.3 percent of GDP per year, or 1.1 percent of GDP during an average fiscal adjustment episode.
- Political and economic correlates:
- Greater electoral proximity associated with smaller promise gaps.
- Stronger political cohesion associated with smaller promise gaps.
- Higher accountability associated with smaller promise gaps.
- Market and electoral consequences:
- Governments that delivered on their fiscal consolidation plans were rewarded by financial markets.
- Delivering on consolidation plans was not associated with being penalized by voters.
Methodology note
- Consolidation episodes identified using the narrative approach (details in full paper).
Thematic subjects and keywords (as listed)
- Subjects: Budget planning and preparation, Fiscal consolidation, Fiscal policy, GDP measurement, National accounts, Output gap, Production, Public financial management (PFM)
- Keywords: accountability, B. measuring Consolidation Promise Gaps, budget implementation, budget plan, Budget planning and preparation, elections, financial market indicator, fiscal consolidation, fractionalization, GDP measurement, government effectiveness, government popularity, market's reaction, narrative approach, Output gap, political economy, promise gap, WP
Authors and publication date
- By Sanjeev Gupta, João Tovar Jalles, Carlos Mulas-Granados, Michela Schena
- February 23, 2017
Content summarized from "Governments and Promised Fiscal Consolidations: Do They Mean What They Say?", IMF Working Papers 2017, 039.