Chipping Away At Public Debt - Sources of Failure and Keys to Success in Fiscal Adjustment

Informationen zum 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. Klappentext Praise for Chipping Away at Public Debt "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 Zusammenfassung 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. Inhaltsverzeichnis Foreword ix Acknowledgments xi Introduction xiii ...

List of contents

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 Discipline 31
Jiri Jonas
 
Introduction 31
 
First Attempt: Balanced Budget and Emergency Deficit Control Act 1985 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 Budget Reconciliation 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 Fiscal Consolidation 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 Pact 72
 
Conclusion 81
 
Notes 82
 
CHAPTER 4 Germany: Fiscal Adjustment Attempts With and Without Reforms 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 Challenges 115
Toni Ahnert, Richard Hughes, and Keiko Takahashi
 
Introduction 115
 
Selection of Consolidation Plans 116
 
Background, Content, and Performance of the Four Adjustment Plans 117
 
Determinants of Success and Failure 125
 
Lessons from Success and Failure 138
 
Appendix 5A. United Kingdom: Fiscal Adjustment Plans and Outturns 140
 
Notes 150
 
CHAPTER 6 Italy: Medium-Term Fiscal Planning under Frequent Government Changes 153
Fabrizio Balassone, Sandro Momigliano, and Pietro Rizza
 
Introduction 153
 
A Brief History of Italy's Fiscal Planning Framework 155
 
Short-Term Origins of Medium-Term Failures 157
 
A Narrative of Design and Performance of Pre- and Post-European Monetary 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 Macroeconomic Shocks 177
Keiko Takahashi and Kiichi Tokuoka
 
Introduction 177
 
The 1997 Fiscal Structural Reform Act 178
 
Medium-Term Fiscal Adjustment Plans: Fiscal Year 2002 and the Following 189
 
Conclusion 203
 
Appendix 7A: The Bohn Fiscal Sustainability Test 206
 
Appendix 7B: Timeline of Medium-Term Fiscal Adjustment Plans in Japan 209
 
Notes 209
 
CHAPTER 8 The Performance of Large Fiscal Adjustment Plans in the European Union: A Cross-Country Statistical Analysis 213
S. Ali Abbas, Fuad Hasanov, Paolo Mauro, and Junhyung Park
 
Introduction 213
 
Data, Sample Selection, and Methodology 216
 
Descriptive Analysis 219
 
Regression Analysis 232
 
Conclusion 241
 
Appendix 8A: Data Issues

Report

"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

Product details

• Authors: P Mauro, Paolo Mauro, Paulo Mauro
• Assisted by: Paolo Mauro (Editor)
• Publisher: Wiley, John and Sons Ltd
• Languages: English
• Product format: Hardback
• Released: 19.08.2011
• EAN: 9781118043387
• ISBN: 978-1-118-04338-7
• No. of pages: 304
• Subjects: Social sciences, law, business > Business > Economics; Volkswirtschaftslehre, Economics, Finanzökonomie, Financial Economics