Success Factors in the Fiscal Consolidation Process
17 Pages Posted: 8 May 2017
Date Written: February 27, 2017
The current economic policy implemented in different countries takes account of the changing external and internal circumstances. The recent crisis (2007–2008) revealed the weakness of the established economic theories, also as regards fiscal policy. Consequently, a great number of countries all over the world saw problems with the growing public finance deficit and the level of public debt. To address it, consolidation measures were taken, aimed to stop this tendency and to gradually go back to the fiscal balance. In this context it is important to identify factors that contribute to the success of the consolidation process undertaken. The article identifies these variables, using a specially built logit econometric model with data from the last 20 years. It also indicates a lack of correlation between achieving a consolidation success and the consolidation method chosen i.e. whether tax policy or expense policy is used for consolidation.
Keywords: Fiscal Consolidation, Crisis, Public Finance Deficit
JEL Classification: G01, H68, F34
Suggested Citation: Suggested Citation