Fiscal Expansions and Fiscal Adjustments in OECD Countries

   (444 K)

This paper considers budget expansions and adjustments in OECD countries in the last three decades. Our main results are: i) on average fiscal expansions are the results of increases in expenditures, particularly of transfer programs, while contractions are typically due to tax increases; ii) however successful (i.e. long lasting), a minority of the total rely primarily on reduction of government wages and employment and cuts in transfer programs; iii) even major successful fiscal adjustments do not seem to have recessionary consequences, on average; iv) different types of governments show different degrees of success at implementing successful fiscal adjustment, with coalition governments showing the worst performance.

Published: Published as "Fiscal Adjustments in OECD Countries: Composition and Macroeconomic Effects", IMF, Vol. 44, no. 2 (June 1997): 210-248.

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