G-7 fiscal restructuring in the 1990s: macroeconomic effects

L. Bartolini, A. Razin, S. Symansky

Research output: Contribution to journalArticlepeer-review

Abstract

During the 1990s many countries are undertaking major fiscal restructuring, cutting expenditures and raising taxes. This paper assesses the macroeconomic effects of such measures in the case of the G-7 countries. It presents the policy measures already taken or currently planned, and analyses their effects, both locally and on partner countries. The general picture is one where fiscal restructuring initially leads to output losses followed by a recovery. In the longer run, the choice of instruments makes a significant difference. Those countries which rely primarily on expenditure cuts or indirect tax increases in their fiscal restructuring (the UK, France and Japan) are projected to enjoy output gains from their adjustment over the long run, while those countries relying mainly on labour and capital taxes (Italy, Germany and the US) are projected to suffer output losses. -Authors

Original languageEnglish
Pages (from-to)109-146
Number of pages38
JournalEconomic Policy
Volume20
DOIs
StatePublished - 1995

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