Fiscal adjustment in a panel of countries 1870-2016.

ABSTRACT: The financial crisis from 2007 and, even more so, the Covid-19 pandemic caused large increases in public sector deficits and debts in many countries and prompted concern about fiscal adjustment. This paper examines fiscal adjustment to debt and deficits for a panel of 17 countries over 1870-2016 using the Jordà-Schularick-Taylor Macrohistory Database. This long span panel is informative since it contains many examples of large fiscal shocks similar to those recently experienced. The results from reduced-form models suggest that large deficits or surpluses tend to prompt stabilising feedbacks, mainly through changes in revenue, and there is greater pressure to adjust on countries running a deficit versus those running a surplus. However, the debt-GDP ratio prompts much less stabilising feed

SUBMITTER: Akhmadieva V 

PROVIDER: S-EPMC9675945 | biostudies-literature | 2022 Jun

REPOSITORIES: biostudies-literature