Measuring the Effectiveness of Budget Consolidation Efforts
Journal of Economics and Statistics, Vol. 211, Nos. 5-6, 1993
Posted: 20 Oct 2008
Date Written: May 17, 1993
Theoretical arguments and empirical evidence are presented to prove the poor quality of the structural budget balance in assessing the effectiveness of budget consolidation efforts. Changes in the structural budget balance currently used as an indicator of fiscal stance give a significantly distorted picture of what consolidation policies achieve. The paper proposes a simple but effective alternative which is free of the shortcomings of the traditional approach. An application to Austrian data illustrates the suggested procedure.
Keywords: Structural budget balance, fiscal stance, consolidation
JEL Classification: H6, H62, H5
Suggested Citation: Suggested Citation