France: Lessons from Past Fiscal Consolidation Plans
IMF Working Papers, April 1, 2011
Source details
- Canonical URL
- France: Lessons from Past Fiscal Consolidation Plans
Other formats
Bibliographic details
- Authors: Edouard Martin, Irina Yakadina, Irina Tytell
- Published: April 1, 2011
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781455233151.001
Summary
- This paper analyzes past fiscal consolidation plans and their outcomes in France.
- It covers:
- the early attempts at fiscal consolidation in the 1970s and the 1980s (Plan Barre and Virage de la Rigueur),
- the first episode of medium-term fiscal consolidation in 1994-97 ahead of joining the European Economic and Monetary Union,
- the fiscal consolidation under the corrective arm of the European Stability and Growth Pact in 2003-07.
- The experiences offer lessons for future consolidation strategies, suggesting:
- binding constraints help focus policymakers’ attention and justify their actions;
- spending restraint needs to be shared and coordinated across all levels of government;
- appropriate deficit targets could help in enforcing budgetary discipline in good times.
Historical episodes analyzed
- 1970s and 1980s: Plan Barre and Virage de la Rigueur.
- 1994-97: Medium-term fiscal consolidation ahead of joining the European Economic and Monetary Union.
- 2003-07: Fiscal consolidation under the corrective arm of the European Stability and Growth Pact.
Key findings and implications
- Binding constraints:
- Help focus policymakers’ attention.
- Provide justification for consolidation measures.
- Spending restraint:
- Needs to be shared across all levels of government.
- Requires coordination to be effective.
- Deficit targets:
- Appropriate deficit targets could help enforce budgetary discipline in good times.
Policy recommendations (derived from lessons)
- Use clearly defined, binding constraints to focus policy action and legitimize reforms.
- Coordinate spending restraint across central and subnational governments to avoid displacement.
- Set appropriate deficit targets to maintain discipline during economic expansions.
Content in this bundle
- _wp1189 - References