Uncertain fiscal consolidations

Huixin Bi, Eric Leeper, Campbell Leith

Research output: Contribution to journalArticleResearchpeer-review

55 Citations (Scopus)

Abstract

This article explores the macroeconomic consequences of fiscal consolidations whose timing and composition - either tax - or spending-based - are uncertain. We find that the composition of the fiscal consolidation, its duration, the monetary policy stance, the level of government debt, and expectations over the likelihood and composition of fiscal consolidations all matter in determining the extent to which a given consolidation is expansionary or successful in stabilising government debt. We argue that the conditions that could render fiscal consolidation efforts expansionary are unlikely to apply in the current economic environment.
Original languageEnglish
Pages (from-to)F31 - F63
Number of pages33
JournalThe Economic Journal
Volume123
Issue number566
DOIs
Publication statusPublished - 2013

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