What sustains fiscal consolidations in emerging market countries?
Article first published online: 3 OCT 2005
Copyright © 2005 John Wiley & Sons, Ltd.
International Journal of Finance & Economics
Volume 10, Issue 4, pages 307–321, October 2005
How to Cite
Gupta, S., Baldacci, E., Clements, B. and Tiongson, E. R. (2005), What sustains fiscal consolidations in emerging market countries?. Int. J. Fin. Econ., 10: 307–321. doi: 10.1002/ijfe.274
- Issue published online: 3 OCT 2005
- Article first published online: 3 OCT 2005
- Fiscal adjustment;
- fiscal consolidation;
- survival analysis;
- emerging markets
This paper examines the factors affecting the persistence of fiscal consolidation in 25 emerging market countries during 1980–2001. It proposes a new approach for defining spells of fiscal consolidation. The results indicate that the probability of ending a fiscal adjustment is affected by the legacy of previous fiscal failures, the size of the deficit, the composition of spending and level of total revenues. There is also some evidence that the initial debt stock, exchange rate developments, inflation and the unemployment rate have an impact on the persistence of adjustments. Copyright © 2005 John Wiley & Sons, Ltd.