The long-run effect of fiscal consolidation on economic growth : evidence from quantitative case studies


Kleis, Mischa ; Moessinger, Marc-Daniel


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URL: https://ub-madoc.bib.uni-mannheim.de/41358
URN: urn:nbn:de:bsz:180-madoc-413584
Document Type: Working paper
Year of publication: 2016
The title of a journal, publication series: ZEW Discussion Papers
Volume: 16-047
Place of publication: Mannheim
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: O40 , E62 , H60,
Keywords (English): Economic growth , fiscal adjustment , fiscal consolidation , synthetic control method
Abstract: We contribute to the literature on the long-run effect of fiscal consolidation on economic growth by applying a novel method for quantitative case studies. Relying on a qualitative (narrative) definition of fiscal consolidations based on an examination of historical policy documents and using the synthetic control method (SCM), we investigate the evolution of post-consolidation trajectories of economic growth in six case studies of OECD countries. In contrast to recent studies that reject the hypothesis of non-Keynesian effects, our results do not offer clear-cut evidence on the long-run effect of fiscal consolidation on economic growth. Half of the case studies point to a positive effect with the other half indicating a negative effect. We further do not find a specific effect of the strength of the fiscal adjustment and the type of consolidation, i.e., whether the consolidation is rather based on expenditure cuts or revenue increases.

Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.




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Kleis, Mischa ; Moessinger, Marc-Daniel (2016) The long-run effect of fiscal consolidation on economic growth : evidence from quantitative case studies. Open Access ZEW Discussion Papers Mannheim 16-047 [Working paper]
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