## What Sustains Fiscal Consolidations in Emerging Market Countries?

_IMF Working Papers, November 1, 2003_

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## Bibliographic details
- Authors: Benedict J. Clements, Sanjeev Gupta, Erwin H Tiongson, Emanuele Baldacci
- Published: November 1, 2003
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451875348.001

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### Overview and scope
- Authors: Benedict J. Clements, Sanjeev Gupta, Erwin H Tiongson, Emanuele Baldacci
- Date: November 1, 2003
- Sample and period: 25 emerging market countries during 1980-2001
- Pages: 27
- Volume: 2003
- Issue: 224
- Series: Working Paper No. 2003/224
- DOI: https://doi.org/10.5089/9781451875348.001
- Stock No: WPIEA2242003
- ISBN: 9781451875348
- ISSN: 1018-5941

### Research approach
- Proposes a new approach for defining spells of fiscal consolidation.
- Empirical focus: factors affecting the persistence (probability of ending) of fiscal adjustments.
- Methodological note: survival analysis terminology and techniques are referenced in the keywords (survival analysis, WP).

### Key empirical findings
- The probability of ending a fiscal adjustment is affected by:
  - the legacy of previous fiscal failures
  - the size of the deficit
  - the composition of spending
  - the level of total revenues
- Additional evidence that may impact persistence of adjustments:
  - the initial debt stock
  - exchange rate developments
  - inflation
  - the unemployment rate

### Policy-relevant implications (as indicated by findings)
- Restoring and maintaining credibility after prior fiscal failures is important for sustaining consolidations.
- Attention to deficit size and revenue levels is central to prolonging fiscal adjustments.
- Composition of spending matters—structural spending choices influence consolidation durability.
- Macroeconomic conditions—debt stocks, exchange rate movements, inflation, and unemployment—can affect the likelihood that fiscal consolidations endure.

### Subject areas and keywords
- Subjects: Asset and liability management, Debt reduction, Fiscal consolidation, Fiscal policy, Government debt management, Public debt, Public financial management (PFM)
- Keywords: Africa, Asia and Pacific, Central Africa, debt country, Debt reduction, debt-to-GDP, deficit, deficit level, deficit reduction, deficit threshold, East Africa, emerging markets, exchange rate depreciation, expenditure program, expenditure reduction, fiscal adjustment, fiscal consolidation, Government debt management, government outlay, Middle East, spending, such deficit reduction, survival analysis, WP

*Source: IMF Working Paper "What Sustains Fiscal Consolidations in Emerging Market Countries?" (Working Paper No. 2003/224, November 1, 2003).*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/what-sustains-fiscal-consolidations-in-emerging-market-countries-16956_