Chipping Away at Public Debt (eBook)

Sources of Failure and Keys to Success in Fiscal Adjustment

Paolo Mauro (Autor)

eBook Download: PDF | EPUB

2011
John Wiley & Sons (Verlag)
9781118113066 (ISBN)

Infos

Path-breaking research on one of the most important macroeconomic policy challenges in the post-crisis world, presented in accessible language Written and researched by a team of experts from the International Monetary Fund, other policy-making institutions, and academia, this timely book looks at fiscal adjustment plans in advanced economies, comparing the planned or projected reductions in debts and deficits to the actual outcomes, and explaining why objectives were met in some cases but missed in others. An overview reveals pitfalls to avoid and lessons learned for securing successful fiscal adjustment. Written by experts in the field Addresses public concern about skyrocketing government debts Contains cutting edge research that changes the way we look at fiscal adjustment Presents meticulous archival research in compelling and engaging case studies Explores lessons learned and policy implications going forward Includes country coverage of all G7 and European Union economies Educating and informing investors, economists, and the general public, this important book looks at why some attempts to curb debts and deficits succeed whereas others fail, as well as how to ensure successful fiscal adjustment in the period ahead.

Autor

PAOLO MAURO is a Division Chief in the IMF's Fiscal Affairs Department. He has published several articles in top economics journals and is coauthor of Emerging Markets and Financial Globalization: Sovereign Bond Spreads in 1870-1913 and Today. The IMF is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. Its Fiscal Affairs Department provides policy and technical advice on public finance issues to member countries.

Inhalt

Foreword ix

Acknowledgments xi

Introduction xiii

CHAPTER 1 Canada: A Success Story 1
Cemile Sancak, Lucy Qian Liu, and Taisuke Nakata

Introduction 1

Background 2

Plans versus Outcomes: Macroeconomic Factors 7

Nature and Composition of Adjustment 13

Structural Reforms 21

Extent to which Adjustments Were Sustained 23

Conclusion 25

Notes 27

CHAPTER 2 United States: The Quest for Fiscal Discipline31
Jiri Jonas

Introduction 31

First Attempt: Balanced Budget and Emergency Deficit Control Act1985 33

Second Attempt: Omnibus Budget Reconciliation Act of 1990 36

Third Attempt: Omnibus Budget Reconciliation Act of 1993 38

Actual versus Projected Fiscal Performance under Omnibus BudgetReconciliation Act of 1993 42

1990s Deficit Reduction: Good Policy or Good Luck? 44

Easy Won, Easy Lost? 50

Conclusion 52

Notes 54

CHAPTER 3 France: Virtue and Fortune 57
Edouard Martin, Irina Tytell, and Irina Yakadina

Introduction: Factors Underlying the Need for FiscalConsolidation 57

Early Attempts at Fiscal Adjustment 61

A First Attempt at Medium-Term Fiscal Consolidation,1994-97 64

A More Systematic Approach to Medium-Term Budgeting:Consolidation Experiences under the Stability and Growth Pact72

Conclusion 81

Notes 82

CHAPTER 4 Germany: Fiscal Adjustment Attempts With and WithoutReforms 85
Christian Breuer, Jan Gottschalk, and Anna Ivanova

Introduction 85

1975-79 Consolidation Attempt 88

1981-85 Consolidation Attempt 93

1991-95 Consolidation Attempt 99

2003-07 Consolidation Attempt 105

Lessons 110

Notes 112

CHAPTER 5 United Kingdom: Four Chancellors Facing Challenges115
Toni Ahnert, Richard Hughes, and Keiko Takahashi

Introduction 115

Selection of Consolidation Plans 116

Background, Content, and Performance of the Four AdjustmentPlans 117

Determinants of Success and Failure 125

Lessons from Success and Failure 138

Appendix 5A. United Kingdom: Fiscal Adjustment Plans andOutturns 140

Notes 150

CHAPTER 6 Italy: Medium-Term Fiscal Planning under FrequentGovernment Changes 153
Fabrizio Balassone, Sandro Momigliano, and Pietro Rizza

Introduction 153

A Brief History of Italy's Fiscal Planning Framework155

Short-Term Origins of Medium-Term Failures 157

A Narrative of Design and Performance of Pre- and Post-EuropeanMonetary Unit Plans 162

Implementing Plans for the Year Ahead 165

Two Important Plans Analyzed in Detail 167

Conclusion 172

Notes 174

CHAPTER 7 Japan: Fiscal Adjustment Plans and MacroeconomicShocks 177
Keiko Takahashi and Kiichi Tokuoka

Introduction 177

The 1997 Fiscal Structural Reform Act 178

Medium-Term Fiscal Adjustment Plans: Fiscal Year 2002 and theFollowing 189

Conclusion 203

Appendix 7A: The Bohn Fiscal Sustainability Test 206

Appendix 7B: Timeline of Medium-Term Fiscal Adjustment Plans inJapan 209

Notes 209

CHAPTER 8 The Performance of Large Fiscal Adjustment Plans inthe European Union: A Cross-Country Statistical Analysis 213
S. Ali Abbas, Fuad Hasanov, Paolo Mauro, and JunhyungPark

Introduction 213

Data, Sample Selection, and Methodology 216

Descriptive Analysis 219

Regression Analysis 232

Conclusion 241

Appendix 8A: Data Issues and Cyclical Adjustment 243

Appendix 8B: Timeline for European Monetary Integration(1990-2009) 245

Notes 246

CHAPTER 9 Conclusion 249

Key Findings: What Failed and What Worked in Past Attempts atFiscal Adjustment 251

Implications for Planned Adjustments 255

Notes 258

References 259

About the Project Team 267

Index 271

Rezensionen

"This analytical cross-country study of fiscal adjustment will be
highly relevant for several countries, especially those in the euro
area that, in the context of the new European governance, will
follow a path of public debt reduction in the years ahead."

--Carlo Azeglio Ciampi, Emeritus President of the Italian
Republic (President, 1999-2006; Finance Minister,
1996-1999)

"Unfortunately, out of necessity, the issues of debt and deficit
dominate the national debate in too many countries. The experience
of others can often provide a guide to solutions--what to do
and what not to do. In this context, this book will prove
invaluable."

--The Right Honorable Paul Martin, former Finance Minister
(1993-2002) and Prime Minister (2003-2006) of
Canada

"Budget consolidation may well be the defining macroeconomic
issue for the industrialized world over the next decade. The budget
debate is as unbalanced as the budget. Ideology and rhetoric
dominate in places where evidence and logic should dominate. This
important book balances the debate by providing careful and
analytic evidence on all the important tradeoffs. It is a must-read
for everyone concerned about our fiscal future."

--Lawrence H. Summers, University Professor at Harvard
University; former Director, National Economic Council
(2009-2011); Secretary of the U.S. Treasury
(1999-2001)

"Reducing public debt will be the main policy issue for the next
decade. This volume greatly helps us understand how to do it in a
way that achieves the intended objectives despite unexpected events
that will inevitably occur. We don't know as much as we should
about fiscal policy: this volume improves our understanding with a
careful analysis of many international examples of fiscal
adjustment. A great read."

--Alberto Alesina, Professor of Political Economy, Harvard
University

"How should countries around the world deal with their
burgeoning levels of national debt? This timely book's detailed
case studies illustrate that though failure is common, there is
also more than one path to success and a number of key principles
that can serve as a guide to navigation."

--Alan J. Auerbach, Professor of Economics and Law, Director
of the Burch Center for Tax Policy and Public Finance, University
of California, Berkeley

"There are few questions more important in the U.S. and Europe
today than how public debt will be brought under control.
Chipping Away at Public Debt reviews a wealth of experience
with large-scale fiscal adjustment plans in advanced economies,
drawing on country studies as well as statistical analysis. The
authors reach useful and sometimes unexpected conclusions. In
particular, economic factors such as 'growth surprises' are perhaps
even more important than political factors in determining
success."

--Dani Rodrik, Professor of International Political Economy,
John F. Kennedy School of Government, Harvard University

Produkt-Details

• Erscheint lt. Verlag: 17.6.2011
• Sprache: englisch
• Themenwelt: Sozialwissenschaften ► Politik / Verwaltung ► Staat / Verwaltung
• Themenwelt: Wirtschaft ► Volkswirtschaftslehre ► Wirtschaftspolitik
• Schlagworte: Economics • Financial Economics • Finanzökonomie • Finanzökonomie • Paolo Mauro, public debt, fiscal deficit, International Monetary Fund, IMF, Emerging Markets and Financial Globalization, fiscal policy, fiscal adjustment. How Markets Fail, deficit, government debt, budget deficit • Volkswirtschaftslehre
• ISBN-13: 9781118113066 / 9781118113066