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The Effects of Fiscal Consolidations on the Debt Distribution / Francesco Frangiamore, Davide Furceri, Domenico Giannone, Faizaan Kisat, Pietro Pizzuto.
- Format:
- Book
- Government document
- Author/Creator:
- Frangiamore, Francesco.
- Series:
- IMF Working Papers; Working Paper ; No. 2025/201
- IMF Working Papers
- Language:
- English
- Physical Description:
- 1 online resource (60 pages)
- Place of Publication:
- Washington, D.C. : International Monetary Fund, 2025.
- Summary:
- This paper estimates the effects of fiscal expenditure consolidations on the entire distribution of public debt-to-GDP for an unbalanced sample of 192 countries over the period 1991-2021. Employing panel location-scale models, we show that government expenditure cuts significantly lower the location (average) of the future debt-to-GDP distribution and its scale (variance), thus also implying a reduction in the uncertainty surrounding public debt. Consequently, we uncover a downward sloping trend in the effects of government expenditure consolidations across the quantiles of the debt-to-GDP distribution. These effects persist up to a 4-year forecast horizon, with the highest reduction occurring on the right tail of the debt-to-GDP distribution, defined as debt-at-risk. We also show that fiscal expenditure consolidations are more effective in reducing debt-to-GDP when the debt levels are higher and when countries adopt a fiscal rule.
- Notes:
- Description based on print version record.
- ISBN:
- 979-82-290-2803-5
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