Fiscal Restructuring in the Group of Seven Major Industrial Countries in the 1990s: Macroeconomic Effects

37 Pages Posted: 15 Feb 2006

See all articles by Leonardo Bartolini

Leonardo Bartolini

Deceased

Assaf Razin

Tel Aviv University - Eitan Berglas School of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

Steven Symansky

International Monetary Fund (IMF) - Fiscal Affairs Department

Date Written: March 1995

Abstract

This paper studies the fiscal restructuring of the first half of the 1990s in the major industrial countries. It presents and calibrates a simple model of the labor market and integrates it into a multi-country macroeconomic model that takes into account the effects of distortionary taxes. It then uses the resulting framework to simulate the effects of recent and prospective changes in fiscal policies in the group of seven major industrial countries. The analysis suggests that in the long run the impact on output is likely to be positive in those countries that relied relatively more on expenditure cuts or indirect tax increases (such as Canada, France, Japan, and the United Kingdom), while the effect of the fiscal restructuring on output is estimated to be negative in those countries that relied primarily on labor and capital taxes (Germany, Italy, and the United States).

JEL Classification: E62, H62

Suggested Citation

Bartolini (deceased), Leonardo and Razin, Assaf and Symansky, Steven, Fiscal Restructuring in the Group of Seven Major Industrial Countries in the 1990s: Macroeconomic Effects (March 1995). IMF Working Paper, Vol. , pp. 1-37, 1995. Available at SSRN: https://ssrn.com/abstract=883184

Assaf Razin

Tel Aviv University - Eitan Berglas School of Economics ( email )

P.O. Box 39040
Ramat Aviv, Tel Aviv, 69978
Israel
+972 3 640 7303 (Phone)
+972 3 640 9908 (Fax)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Steven Symansky

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

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