{
  "title": "Fiscal Glass is Half Full: Some Reasons for Optimism",
  "publication": "IMF Blog, September 21, 2011",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2011/09/21/fiscal-glass-is-half-full-some-reasons-for-optimism",
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  "summary": "Author: Carlo Cottarelli",
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    {
      "heading": "Overview",
      "content": "- Author: Carlo Cottarelli\n- Date: September 21, 2011\n- Main message: Despite high public debt and fiscal deficits in many advanced economies, important progress has been made in fiscal adjustment over the last couple of years; nevertheless, significant challenges remain to stabilize and reduce public debt without undermining fragile economic recoveries."
    },
    {
      "heading": "Fiscal progress and projections",
      "content": "- For most countries, government deficits have fallen substantially—by 2¼ percentage points of GDP on average compared to two years ago.\n- The fiscal outlook in most countries is stronger than projected two years ago.\n- For the five largest European countries:\n  - Previous projections (from two years ago) showed larger increases in public debt to GDP ratios for the period 2012 through 2014 (described as shown in gray).\n  - Current projections show smaller increases in debt over that same period, and in some cases debt is now expected to fall (described as shown in blue).\n  - This improvement reflects commitments by these countries to reduce their deficits over an extended period."
    },
    {
      "heading": "Europe: market perceptions, communications, and political implementation",
      "content": "- Observed gap: Europe’s financial markets appear to think the region is not doing enough on the fiscal front despite measurable progress.\n- Possible causes:\n  - Communications: The Euro area has \"a cacophony of voices\" with 17 policymakers expressing views, creating uncertainty when markets seek a clear voice and message.\n  - Implementation: Summer agreements by European leaders give flexibility to address problems early, but these agreements still need to be implemented. Prompt implementation would send a clear political signal that Euro area members will continue to do whatever it takes to preserve confidence."
    },
    {
      "heading": "Policy challenges and country-specific approaches",
      "content": "- Dual objective for fiscal policymakers:\n  - Commit to a plan that will stabilize and then bring down public debt so the public sector is not a source of instability.\n  - Ensure fiscal tightening does not itself become a source of instability by undermining the economic recovery, which is at a delicate moment.\n- Country circumstances determine the appropriate mix of short- and long-term adjustment:\n  - Some countries will have no choice but to tighten significantly in the short term because of market conditions, while minimizing the growth fallout.\n  - Others with easier financing conditions may have scope for a more moderate pace of short-term adjustment, especially if their medium-term commitment is seen as highly credible."
    },
    {
      "heading": "United States: example and policy elements",
      "content": "- A credible program to reduce debt and deficits over the medium term could free up space for a short-term stance more attuned to the economic cycle.\n- The American Jobs Act proposed by President Obama can play an important role in supporting growth and employment if embedded in an appropriate medium-term framework to bring down public debt.\n- Given the size of the adjustment needed in the United States:\n  - The medium-term framework will need to involve an increase in tax revenues.\n  - It will be important to ensure that the burden of increased tax revenues is distributed equitably across society.\n  - Reform of entitlements—both health care and social security—to contain the growth of spending on these items is also needed.\n  - Any debt reduction package must be the product of a broad political consensus to give financial markets confidence that it will be adhered to over the long haul."
    },
    {
      "heading": "Tone and concluding guidance",
      "content": "- Advice to audiences:\n  - To pessimists: do not lose sight of what has been achieved.\n  - To optimists: do not underestimate what still needs to be done.\n- Metaphor: Markets seem to focus on the glass being half empty and ignore that it is also half full; take stock of progress before tackling the remaining challenges.\n- Related media: a video is embedded in the original content (youtube=http://www.youtube.com/watch?v=t1-Qb0jhVsA).\n\nSource: Carlo Cottarelli, September 21, 2011.\n\n---\n\n Content in this bundle\n\n- 092111ba\n  - 092111ba (PDF){rel=\"external\" type=\"text/html; charset=utf-8\"}\n- iMFdirect 博客: 财政水杯半满：有一些乐观的理由, 2011 年 9 月 21 日\n  - iMFdirect 博客: 财政水杯半满：有一些乐观的理由, 2011 年 9 月 21 日 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - iMFdirect 博客: 财政水杯半满：有一些乐观的理由, 2011 年 9 月 21 日 (PDF){rel=\"external\" type=\"application/pdf\"}\n- Бюджетный стакан наполовину полон: некоторые причины для оптимизма\n  - Бюджетный стакан наполовину полон: некоторые причины для оптимизма (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Бюджетный стакан наполовину полон: некоторые причины для оптимизма (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- fiscal outlook\n\nSource: https://www.imf.org/en/blogs/articles/2011/09/21/fiscal-glass-is-half-full-some-reasons-for-optimism"
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    "Authors: Carlo Cottarelli",
    "Published: September 21, 2011",
    "Author: Carlo Cottarelli",
    "Date: September 21, 2011",
    "Main message: Despite high public debt and fiscal deficits in many advanced economies, important progress has been made in fiscal adjustment over the last couple of years; nevertheless, significant challenges remain to stabilize and reduce public debt without undermining fragile economic recoveries.",
    "For most countries, government deficits have fallen substantially—by 2¼ percentage points of GDP on average compared to two years ago.",
    "The fiscal outlook in most countries is stronger than projected two years ago.",
    "For the five largest European countries:",
    "Observed gap: Europe’s financial markets appear to think the region is not doing enough on the fiscal front despite measurable progress.",
    "Possible causes:",
    "Dual objective for fiscal policymakers:",
    "Country circumstances determine the appropriate mix of short- and long-term adjustment:",
    "A credible program to reduce debt and deficits over the medium term could free up space for a short-term stance more attuned to the economic cycle.",
    "The American Jobs Act proposed by President Obama can play an important role in supporting growth and employment if embedded in an appropriate medium-term framework to bring down public debt.",
    "Given the size of the adjustment needed in the United States:",
    "Advice to audiences:",
    "Metaphor: Markets seem to focus on the glass being half empty and ignore that it is also half full; take stock of progress before tackling the remaining challenges.",
    "Related media: a video is embedded in the original content (youtube=http://www.youtube.com/watch?v=t1-Qb0jhVsA).",
    "**092111ba**",
    "**iMFdirect 博客: 财政水杯半满：有一些乐观的理由, 2011 年 9 月 21 日**",
    "**Бюджетный стакан наполовину полон: некоторые причины для оптимизма**",
    "[fiscal outlook](http://www.imf.org/external/pubs/ft/survey/so/2011/NEW092011A.htm)"
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